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Sharp to Include SRS Headphone in Phones for J-PHONE, Third Largest Cellular Phone Carrier in Japan

The new Sharp cellular phone is similar to a PDA, in that it incorporates functions such as a music player, personal calendar, digital still and movie camera, email, web access and more. Under the terms of the agreement, Sharp Corporation has licensed SRS Headphone technology for the J-SH51 phone to improve the sound quality of its MP3 playback. SRS Headphone technology enables customers with these new MP3 player-enabled cellular phones to enjoy an enhanced listening experience through headphones.

The number of cellular phone subscribers in Japan reached approximately 67 million in the end of 2001. SRS Labs' regional sales office in Japan enables the company to quickly penetrate this important regional market through its understanding of the culture and its specific market needs. ``The combination of our local support, our platform strategy and the value of our brand name backed by the quality of our technology have helped to drive our success in this critical market,'' said Hank Kato, director of Japan operations for SRS Labs.

``This is a major step forward in our penetration of the cellular phone market,'' said Thomas C.K. Yuen, chairman, CEO and president of SRS Labs. ``We saw the cellular phone market evolving with users requiring additional PDA-like features that not only provide communication, but also news, video and audio entertainment. That's where SRS technologies come in. We are pleased that we have now achieved significant market penetration with both our voice and audio technologies.''

Yuen continued, ``As a long-time licensee, Sharp has expanded their use of our technologies to now include cellular phones. They saw the benefit of providing an SRS enhanced audio experience for music playback, which is becoming the next 'must-have' feature for cellular phones. Since Japanese manufacturers such as Sharp are generally ahead of the technology curve, we expect Sharp to start a significant trend in this market area.''

About SRS Headphone

SRS Labs' Headphone technology provides a realistic and spacious listening experience through any standard headphones. Based on the same psychoacoustic research as the patented and award-winning Sound Retrieval System(TM) (SRS) technology, SRS Headphone was refined for audio playback through headphones or ear buds. The process repositions the sound so that the listener experiences the sound as if it is coming from locations all around the head, creating a more natural and exciting listening experience without relying on special recording techniques.

About Sharp

Sharp Corporation is a worldwide developer of innovative products and core technologies that play a key role in shaping the future of electronics. As a leader in liquid crystal displays (LCDs) and digital technologies, Sharp offers one of the broadest and most advanced lines of consumer electronics, information products and electronic components, while also creating new network businesses. Sharp currently employs about 59,800 people in the world and recorded consolidated annual sales of over 2,012.8 billion yen for the fiscal year ended March 31,2001. For more information, please visit Sharp's Web site at http://sharp-world.com/index.html .

About J-PHONE

J-PHONE Co., Ltd. (J-PHONE) is one of Japan's leading mobile operators, offering a full range of mobile communications services and extensive network coverage throughout Japan. As well as high-quality voice telephony, J-PHONE offers a sophisticated mobile interactive service, J-Sky, with features including photo transmission, connection to Internet providers, 3D graphics and Java applications. As of January 2001, J-PHONE had almost 11.8 million customers, of which more than 80% subscribed to J-Sky. J-PHONE has been awarded one of three licenses to operate 3G mobile services in Japan, and is currently at an advanced stage of development of a 3G W-CDMA mobile platform.

J-PHONE was established on November 1 following the merger of three regional operating companies (J-Phone East, J-Phone West, and J-Phone Central) and J-Phone Communications, and is part of the JAPAN TELECOM group. On October 26, 2001, Vodafone Group Plc and its subsidiaries (the ``Vodafone Group'') increased its holding in JAPAN TELECOM to a controlling level of 66.7%, and its economic interest in J-PHONE to 69.7%.

About SRS Labs

SRS Labs, Inc. (www.srslabs.com ) and its subsidiaries provide advanced sound solutions for high growth consumer markets, including home theater, DVD, portable audio, wireless devices, game consoles, automotive, broadcast, Internet and personal computer software. SRS Labs, the parent company, develops the core technologies and licenses these patented technologies to over 200 well-known manufacturers and semiconductor companies, including Sony, RCA, Philips, Kenwood, Mitsubishi, Hitachi, Microsoft, and Pioneer. ValenceTech, Ltd., (www.valencetech.com ) SRS Labs' Hong Kong-based subsidiary, is a leading fabless ASIC design and manufacturing company providing analog and digital ASIC solutions to the world's leading manufacturers of consumer electronics, gaming, telecommunications and computer products. SRS Labs' subsidiary, SRSWOWcast Technologies, (www.srstechnologies.com ) focuses on the Internet and broadcast markets by developing and licensing customized hardware and software products incorporating SRS Labs' patented technologies.

SRS, Sound Retrieval System, SRS Headphone, and the SRS Logo are registered trademarks of SRS Labs, Inc. in the United States and selected foreign countries.

Except for historical information contained in this release, statements in this release, including the statement by Mr. Yuen in paragraph five regarding cellular phone market trends 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 SRS Labs' continued relationship with Sharp Cellular and its inclusion in future projects, the actual progression of the cell phone market and Sharp's continued status as a leader in that market, 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 the economic impact of recent or future terrorist actions and other risks detailed in the Company's Form 10-K and other periodic reports filed with the SEC.

For further information, please contact: investors, Tami Yanito, +1-949-442-1070, ext. 3093, tami@srslabs.com, or media, Jennifer Drescher, +1-949-442-1070, ext. 5110, jenniferd@srslabs.com, both of SRS Labs, Inc.

SOURCE: SRS Labs, Inc.