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Company Reports a 23% Increase in Top Line Revenue Over 2001 and $0.06 Annual Earnings Per Share for 2002

For the year ended December 31, 2002, the company reported revenue of $19 million and net income of $806,352, as compared to year end 2001 revenue of $15.4 million and a net loss of $3.9 million. SRS Labs' balance sheet remains strong at December 31, 2002 with no external debt. The company improved its cash position by $2.8 million, year over year. Cash, cash equivalents and long-term investments were $22.4 million at December 31, 2002, as compared to $19.6 million at December 31, 2001.

Thomas C.K. Yuen, chairman, CEO and president of SRS Labs, Inc., commented: "I am very pleased to report that we accomplished our goals and delivered profitability in 2002. We achieved strong growth in our technology licensing business through the execution of our strategies to leverage our platform partners, penetrate new high growth and high volume markets and expand the use of our technologies by existing licensees. The performance of our ValenceTech subsidiary was also strong as we delivered improved operating results through the expansion of our ASIC customer base, the increase in design wins and chip offerings and the continued emphasis on our high margin semiconductor design business.

"I also am very proud of our employees who have worked so hard to make this year possible. Our focused and proven management team led our company to grow revenue and continue the cost control measures that resulted in improved consolidated gross margins and net profit. Beyond our positive operational results, we have strengthened our market leadership position and our relationships with our global network of partners. This powerful combination, coupled with our strong cash position, gives us a solid platform from which we will strive to grow revenue and take advantage of future business opportunities."

Yuen concluded: "While we are pleased with our accomplishments in 2002, we are cautious of the near term business prospects, as the current political and economic environment has made it difficult to predict future business growth over the coming quarters. As a result, management has decided not to provide any forward-looking financial guidance for 2003 at this time. Our caution, however, will not distract us from working to maximize our current momentum and continuing to execute our business strategy."

In conjunction with the announcement of SRS Labs' (Nasdaq: SRSL) year end results, you are invited to listen to our conference call that will be broadcast live over the Internet today at 2:00 p.m. PST (5:00 p.m. EST) at http://www.vcall.com/EventPage.asp?ID=83421 or http://www.firstcallevents.com/service/ajwz376692086gf12.html . The live conference can also be found through a link in the Investor section of SRS Labs' website at www.srslabs.com .

About SRS Labs, Inc.

Celebrating a decade in audio technology innovation, SRS Labs has become a recognized leader in the advancement of audio and voice technology. The company works with the world's top manufacturers to provide a richer entertainment experience through patented sound techniques. SRS technologies can be heard through products ranging from televisions, DVD players, and cell phones to car audio systems and computers. Through its SRSWOWcast subsidiary, the company offers hardware and software tools to professionals and consumers for the production and broadcast of content featuring SRS technologies. SRS Labs' wholly owned subsidiary, ValenceTech, is located in Hong Kong and provides custom ASICs and standard ICs to top manufacturers worldwide. Based in Santa Ana, Calif., the company also has licensing representation in Hong Kong, Japan, Europe, and Korea. For more information about SRS Labs, Inc. or SRS technologies, please visit www.srslabs.com . The information on the above-referenced websites is not incorporated by reference into this press release.

Except for historical information contained in this release, statements in this release, including those of Mr. Yuen in paragraphs three, four and five, are forward-looking statements and projections (which include statements concerning plans and objectives of management for future operations) that are based on management's belief, as well as assumptions made by, and information currently available to, management. While the Company believes that its expectations are based upon reasonable assumptions, there can be no assurances that the Company's goals and strategy will be realized. Numerous factors, including risks and uncertainties, may affect the Company's actual results and may cause results to differ materially from those expressed in forward-looking statements made by or on behalf of the Company. Some of these factors include economic impact from the current conflict in Iraq and potential related activities, the general market conditions concerning the semiconductor business, the acceptance of new SRS Labs' products and technologies, the impact of competitive products and pricing, the timely development and release of technologies by the Company, general business and economic conditions, especially in Asia, and other factors detailed in the Company's Form 10-K and other periodic reports filed with the SEC. SRS Labs specifically disclaims any obligation to update or revise any forward-looking statement whether as a result of new information, future developments or otherwise.

For further information please contact Investors, Tami Yanito, x 3093, tami@srslabs.com, or Media, Jennifer Drescher, x 5010, jenniferd@srslabs.com, both of SRS Labs, Inc., +1-949-442-1070.

                         (Financial Tables to Follow)


                                  SRS LABS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                               Fiscal Year Ended Dec. 31,
                                                   2002            2001
     Revenues:
      Semiconductor                            $9,779,712        $5,646,724
      Licensing                                 8,097,394         4,973,584
      Component distribution                      997,857         4,602,819
      Product                                      56,961           189,820
      Internet and broadcast                       69,869            17,983
       Total revenues                         $19,001,793       $15,430,930

     Cost of sales                              4,754,245         6,703,550
     Gross margin                              14,247,548         8,727,380

     Operating expenses
      Sales and marketing                       4,625,833         4,474,575
      Research and development                  4,189,379         3,576,170
      General and administrative                4,889,484         5,167,396
       Total operating expenses                13,704,696        13,218,141
     Income (loss) from operations                542,852        (4,490,761)
     Other income, net                            774,125           796,504
     Minority interest                             77,708           193,005
     Income (loss) before income tax expense    1,394,685        (3,501,252)
     Income tax expense                           588,333           377,519
     Net income (loss)                           $806,352       $(3,878,771)

     Net income (loss) per common share:
      Basic                                         $0.06          $ (0.31)
      Diluted                                       $0.06          $ (0.31)


     Weighted average shares used in the
      calculation of net income (loss) per
      common share:
      Basic                                    12,648,373        12,630,199
      Diluted                                  12,862,199        12,630,199



                                  SRS LABS, INC.
                           CONSOLIDATED BALANCE SHEETS

                                              December 31,     December 31,
                                                  2002             2001

                                      ASSETS
     Current Assets
      Cash and cash equivalents               $15,720,860       $19,011,167
      Investments available for sale                   --           582,556
      Accounts receivable, net of allowance
       for doubtful accounts of $49,049 in
       2002 and $68,888 in 2001                 1,074,421           870,016
      Inventories, net of reserve of $857,986
       in 2002 and $679,052 in 2001               807,382         1,624,067
      Prepaid expenses and other current assets,
       including other receivables of $24,346 in
       2002 and $22,191 in 2001                   462,442           631,844
      Deferred income taxes                        36,147           219,429

       Total Current Assets                    18,101,252        22,939,079

      Investments available for sale            6,630,771                --
      Furniture, fixtures and equipment, net    1,935,424         1,672,801
      Intangible assets, net                    2,490,390         2,852,009
      Deferred income taxes                       149,498           799,499

       Total Assets                           $29,307,335       $28,263,388

                       LIABILITIES AND STOCKHOLDERS' EQUITY

     Current Liabilities
      Accounts payable                         $1,011,032          $822,698
      Accrued liabilities                       2,347,702         1,357,105
      Income taxes payable                        341,172         1,144,493

       Total Current Liabilities                3,699,906         3,324,296

     Minority interest                            325,371           403,079

     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; 12,876,314
       and 12,789,644 shares issued; and
       12,651,014 and 12,664,744 outstanding
       for 2002 and 2001, respectively             12,877            12,790
      Additional paid-in capital               55,966,589        55,745,867
      Cumulative other comprehensive loss         (88,564)          (74,055)
      Accumulated deficit                     (29,890,243)      (30,696,595)
      Treasury stock at cost 225,300 and
       124,900 shares at December 31, 2002
       and 2001, respectively                    (718,601)         (451,994)

       Total Stockholders' Equity              25,282,058        24,536,013
       Total Liabilities And Stockholders'
        Equity                                $29,307,335       $28,263,388