Investors Amplify Sound Provider Digital Theater Systems

For the past four years, movie theaters throughout the world have been filled with sounds provided by Digital Theater Systems of Westlake Village. A leader in the digital sound industry, DTS has provided recordings for a long list of films that includes “Jurassic Park,” “Air Force One” and “Twister.”

In 1995, through its subsidiary DTS Technology, the company began extending that big screen technology to the commercial home market, through compact discs, laserdiscs, digital video discs and computer games.

Initially, DTS Technology was small enough to be supported by the motion picture side of the company. But more recently, the subsidiary has grown too large for the parent company to fund.

In need of capital, DTS officials turned to investors and have received an infusion of $12 million.

The private equity placement is being funded by Eos Partners, Weston Presidio Capital, Scripps Ventures and Phoenix Partners. Hambrecht & Quist investment bank, which will manage the placement, also is among the investors.

“Once we got up on our feet and, with licensees like Panasonic, Kenwood and Yamaha, had the beginning of an income string, we needed to further our engineering staff, bolster our marketing efforts and bolster our infrastructure in consumer business,” said Bill Neighbors, president and chief operating officer of DTS. “We turned to the private market.”

Neighbors said the $12 million will enable DTS Technology to employ more engineers, who will provide technical support to the company’s growing list of licensees in the home video industry and work on developing “edutainment” technology, combining digital educational tools with video games.

Funds also will be used to support the licensees in promoting their products, Neighbors said.

“[The investment] was a major milestone, and it probably came a little earlier than we had planned,” he said. “The momentum we are gaining in the consumer market is probably a little quicker than expected. We’ve got to strike while the iron is hot.”

As DTS closed the investment, it also secured a $7.5-million working capital line of credit with the Imperial Entertainment Group, a division of Imperial Bank in Beverly Hills.