DTS, Inc. announced financial results for its fourth quarter and fiscal year ended December 31, 2010.

DTS trades on the NASDAQ under the symbol DTSI.

For more information visit: www.dts.com

Edited press release follows:

DTS Reports Strong Fourth Quarter and Fiscal 2010 Results

Company Achieves $87 Million in Revenue, GAAP EPS From Continuing Operations of $0.84 and Non-GAAP EPS From Continuing Operations of $1.15

CALABASAS, Calif., Feb. 28, 2011 — DTS, Inc. (Nasdaq:DTSI) today announced financial results for the fourth quarter and fiscal year ended December 31, 2010.

For the fourth quarter of 2010 revenue increased 27% to $26.9 million, and net income from continuing operations was $6.1 million, or $0.34 per diluted share. This compares to revenue of $21.2 million and net income from continuing operations of $4.9 million, or $0.27 per diluted share, reported in the same period of 2009. Included in fourth quarter of 2010 results is $1.6 million, or $0.05 per diluted share net of tax, in stock-based compensation expense and $320,000, or $0.01 per diluted share net of tax, in amortization of intangible assets. In addition, fourth quarter of 2010 results include $654,000, or $0.02 per share net of tax, in restructuring charges related to the pending closure of a Canadian subsidiary and the wind down of certain activities in Japan.

The Company achieved non-GAAP operating margins of 47% and non-GAAP income from continuing operations of $7.7 million, or $0.43 per diluted share net of tax, in the fourth quarter of 2010, excluding the above-mentioned charges. This compares to non-GAAP operating margins of 47% and non-GAAP income from continuing operations of $6.0 million, $0.33 per diluted share, reported in the fourth quarter of 2009.

“The fourth quarter was a strong conclusion to a great year where we achieved revenue growth, excluding royalty recoveries, of 38%, reached $1.15 in non-GAAP earnings per share, and generated $39 million in cash from operations,” commented Jon Kirchner, chairman and CEO of DTS, Inc. “Importantly during the year, Blu-ray became mainstream in most major geographies, and DTS HD Master Audio was the dominant audio format for high quality entertainment on Blu-ray Disc. We also made rapid progress in expanding our relationships in network-connected markets, bringing DTS technology to TV’s, mobile phones, IPTV set-top boxes and other connected devices.”

For fiscal year 2010, revenue increased 12% to $87.1 million, as compared to revenue of $77.7 million in the prior year. Excluding royalty recovery payments of $3.6 million in 2010 and $17.2 million in 2009, revenue increased 38%. Net income from continuing operations was $15.0 million, or $0.84 per diluted share, in 2010, as compared to $10.7 million, or $0.60 per diluted share, reported in 2009. Included in 2010 results were $7.0 million, or $0.24 per diluted share net of tax, in stock-based compensation expense and $1.4 million, or $0.05 per diluted share net of tax, in amortization of intangibles. In addition, 2010 results include $654,000, or $0.02 per share net of tax, in restructuring charges as described above.

For fiscal year 2010, the Company achieved non-GAAP operating margins of 38% and non-GAAP income from continuing operations of $20.5 million, or $1.15 per diluted share, excluding the above-mentioned charges. This compares to non-GAAP operating margins of 33% and non-GAAP income from continuing operations of $15.0 million, or $0.85 per diluted share, reported in fiscal year 2009.

The GAAP to non-GAAP reconciling items, for the quarters and years ended December 31, 2010 and 2009 can be found in “The Reconciliations of GAAP to Non-GAAP Financial Measures” attached to this press release.

During the year, the Company generated $39.0 million in cash from operating activities and closed the year with cash and investments of $101.4 million.

“With the growth in Blu-ray and rapidly expanding opportunity in connected devices, we are excited about our prospects for 2011 and beyond. We will continue to make focused investments to extend our penetration in networked-entertainment, which is expected to drive higher growth over the long-term.

“For 2011, we currently expect revenue to be in the range of $100 to 105 million, non-GAAP operating margins to be in the lower 40’s, and non-GAAP EPS to be in the range of $1.40 to $1.49 per diluted share, excluding the impact of both stock based compensation and amortization of intangibles, and the estimated tax impact of those items. The company expects stock based compensation in the range of $0.32 to $0.34 per share net of tax in 2011, up from $0.24 in 2010 as a result of a higher stock price, expanding headcount and the initiation of a three year out-performance grant program tied to exceeding certain relative total shareholder return metrics. On a GAAP basis, we expect operating margins in the low 30s, and EPS in the range of $1.04 to $1.12 cents per diluted share,” concluded Kirchner.

Conference Call Information for Monday, February 28, 2011
DTS will broadcast a conference call today, Monday, February 28, 2011, starting at 1:30 p.m. Pacific Time. To access the conference call, dial 1-877-941-4774 or 1-480-629-9760 (outside the U.S. and Canada). The live webcast of the call will be available from the Investor Relations section of the Company’s corporate website at www.dts.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 3:30 p.m. Pacific Time on February 28, 2011 through March 7, 2011, by dialing 1-800-406-7325 or 1-303-590-3030 (outside the U.S. and Canada) and entering the pass code 4401284#.

About DTS, INC.
DTS, Inc. (Nasdaq:DTSI) is dedicated to making digital entertainment exciting, engaging and effortless by providing state-of-the-art audio technology to hundreds of millions of DTS-licensed consumer electronics products worldwide. From a renowned legacy as a pioneer in multi-channel audio, DTS became a mandatory audio format in the Blu-ray Disc™ standard and is now increasingly deployed in enabling digital delivery of movies and other forms of digital entertainment on a growing array of network-connected consumer devices. DTS technology is in home theaters, car audio systems, PCs, game consoles, DVD players, televisions, digital media players, set-top boxes, smart phones, surround music software and every device capable of playing Blu-ray discs. Founded in 1993, DTS’ corporate headquarters are located in Calabasas, California with its licensing operations headquartered in Limerick, Ireland. DTS also has offices in Northern California, Washington, China, France, Hong Kong, Japan, South Korea, Taiwan, Singapore and the United Kingdom. For further information, please visit www.dts.com.