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Company Reports Quarterly Earnings Per Share of $0.01 and Year-to-Date Earnings Per Share of $0.01

Technology licensing revenues decreased 8 percent over the same quarter last year and semiconductor revenues decreased 2 percent over the same period in 2002. Consolidated gross margin improved to 75 percent for the quarter ended September 30, 2003, compared to 72 percent for the same period last year.

For the nine months ended September 30, 2003, the company reported consolidated revenue of $13,882,614, an increase of 6.8 percent over consolidated revenue of $12,995,353, for the same period in 2002. For the nine months ended September 30, 2003, the company reported a net income of $127,478, or $0.01 earnings per share, compared to a net income of $109,597 or $0.01 earnings per share, for the same period last year. The company's cash and investments position totaled $21.9 million on September 30, 2003.

Janet Biski, chief financial officer of SRS Labs said, "As we have previously noted in our financial filings, one of the risks associated with our licensing business is product and customer concentration. From time to time, certain original equipment manufacturer (OEM) and semiconductor manufacturer customers may account for a significant portion of revenue from a particular product application. In the third quarter of 2003, licensing revenues were adversely affected by the decision of one of our manufacturing customers who accounted for a significant portion of the company's licensing revenues from the sales of DVD players, to discontinue the use of our technologies in the traditional DVD player segment because of pricing pressures in the DVD market. We were able to offset a majority of the decrease in the third quarter as a result of revenues generated from new product categories and the increased penetration of SRS Labs' technologies in our home theater market. These revenues reflect upon the company's strategy to diversify its customer base."

Biski continued, "Our gross margins for our ASIC business decreased four percent from last year, reflecting competitive pricing in the semiconductor market. In addition, our operating expenses grew as a result of our promotional investments to support our OEMs, and diversification into new markets. We also made investments in R&D to develop new technologies and semiconductor solutions in all of our key markets."

Thomas C. K. Yuen, SRS Labs' chairman and CEO, said: "In the third quarter, we saw the positive results of our strategy to diversify our licensing and semiconductor businesses, even as revenues decreased from last year. We developed new chip solutions with our patented audio, voice and surround sound technologies for sale to manufacturers in the Asia Pacific region. Our licensing efforts are focused on continuing the diversification of our customer base and expanding our technology offerings across new semiconductor platforms, such as ST Microelectronics and PacketVideo, to service a larger portion of the consumer electronics marketplace."

  Some key highlights for the quarter ended September 30, 2003 include:

   -- Home Theater & Consumer Audio - Expanded relationship with Philips
      Semiconductor for the global TV market, and Samsung, Sampo, and
      Nakamichi for the fast-growing flat panel TV segment

   -- Portable and Wireless Devices - Announced an agreement with NEC for
      mobile phones and formed partnerships with Intel, ARM, and PacketVideo
      for portable and wireless devices

   -- ValenceTech - Design wins with Sony and Philips for ASP standard chips
      featuring SRS technologies

Yuen continued, "I am pleased with the initial signs of success in our diversification strategy. We feel that the strong foundation we are building this year will help insulate us against product and customer concentration issues and put us in a better position to capitalize on opportunities in growing markets, such as cell phones and flat panel TVs."

In conjunction with SRS Labs' (NASDAQ:SRSL) third quarter results, investors will have the opportunity to listen to the conference call live online through the investor section of the SRS website or through the following links: http://www.firstcallevents.com/service/ajwz392961981gf12.html or http://www.vcall.com/CEPage.asp?ID=85116 today, November 13, 2003 at 3pm EDT or link to the conference from 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 Labs' technologies can be heard through products ranging from televisions, DVD players, cell phones, car audio systems and computers. The company also offers hardware and software tools to professionals and consumers for the production and broadcast of content featuring SRS Labs' technologies. SRS Labs' wholly owned subsidiary, ValenceTech, is located in Hong Kong and provides custom ASICs and standard ICs to leading 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. 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 and Ms. Biski, 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 the general market conditions concerning the overall 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, product and customer concentration risks, 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.

   Investor Contact:
    Tami Yanito
    (949) 442-1070 x 3093
    tami@srslabs.com.



             CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               (Unaudited)

                         Three Months Ended         Nine Months Ended
                             September 30,             September 30,
                         2003           2002        2003         2002
  Revenues:
    Licensing         $1,854,707   $2,008,554   $6,441,297   $5,240,117
    Semiconductor      2,884,248    2,945,687    7,063,008    6,782,127
    Other                147,439      457,372      378,309      973,109
  Total revenues       4,886,394    5,411,613   13,882,614   12,995,353

  Cost of sales        1,242,436    1,505,290    2,812,569    3,413,450

  Gross margin         3,643,958    3,906,323   11,070,045    9,581,903

  Operating expenses:
    Sales and
     marketing         1,216,568      995,759    3,840,155    3,188,978
    Research and
     development       1,032,100      992,839    3,083,438    2,895,436
    General and
     administrative    1,143,930    1,272,031    3,668,573    3,385,737


       Total operating
        expenses       3,392,598    3,260,629   10,592,166    9,470,151


  Income from operations 251,360      645,694      477,879      111,752

  Other income, net      131,925      295,332      414,655      611,882
  Minority interest           --       19,178        5,430       59,208

  Income before income
    tax expense          383,285      960,204      897,964      782,842


  Income tax expense     264,459      364,430      770,486      673,245


  Net income            $118,826     $595,774     $127,478     $109,597

  Net income per common share:
  Basic                    $0.01        $0.05        $0.01        $0.01
  Diluted                  $0.01        $0.05        $0.01        $0.01

  Weighted average shares
    used in the calculation
    of net income per common
    share:

    Basic             13,076,315   12,623,339   12,956,971   12,659,347
    Diluted           14,730,290   12,758,058   13,729,676   12,903,526


                  CONDENSED CONSOLIDATED BALANCE SHEETS

                                            Sept. 30, 2003  Dec. 31, 2002
                                                (unaudited)
               ASSETS

    Current Assets
    Cash and cash equivalents                  $11,290,949    $15,720,860
    Accounts receivable, net                     1,155,884      1,074,421
    Inventories, net                               948,816        807,382
    Prepaid expenses and other current assets      607,365        462,442
    Deferred income taxes                           36,147         36,147

      Total Current Assets                      14,039,161     18,101,252

    Investments available for sale              10,687,813      6,630,771
    Furniture, fixtures & equipment, net         1,741,506      1,935,424
    Goodwill, net                                1,173,102        533,031
    Intangible assets, net                       1,889,577      1,957,359
    Deferred income taxes                          172,318        149,498

      Total Assets                             $29,703,477    $29,307,335

               LIABILITIES AND STOCKHOLDERS' EQUITY

  Current Liabilities
    Accounts payable                            $1,164,736     $1,011,032
    Accrued liabilities                          1,204,232      2,347,702
    Income taxes payable                           591,806        341,172

      Total Current Liabilities                  2,960,774      3,699,906
  Minority interest                                     --        325,371
  Commitments and contingencies

  Stockholders' Equity
  Preferred stock - $.001 par value;
    2,000,000 shares authorized; no
    shares issued or outstanding                        --             --
  Common stock - $.001 par value;
    56,000,000 shares authorized;
    13,364,198 and 12,876,314 shares
    issued; and 13,138,898 and
    12,651,014 shares outstanding
    at September 30, 2003 and
    December 31, 2002, respectively                 13,365         12,877
  Additional paid in capital                    57,366,350     55,966,589
  Accumulated other comprehensive loss            (155,646)       (88,564)
  Accumulated deficit                          (29,762,765)   (29,890,243)
  Treasury stock at cost, 225,300
  shares at September 30, 2003
  and at December 31, 2002                        (718,601)      (718,601)

       Total Stockholders' Equity               26,742,703     25,282,058

       Total Liabilities and Stockholders'
        Equity                                $29,703,477    $29,307,335

Source: SRS Labs, Inc.