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| 8-K - DOLBY LABORATORIES, INC. 8-K - Dolby Laboratories, Inc. | a50675221.htm |
Exhibit 99.1
Dolby Laboratories Reports Third Quarter Fiscal 2013 Financial Results
SAN FRANCISCO--(BUSINESS WIRE)--July 25, 2013--Dolby Laboratories, Inc. (NYSE:DLB) today announced the Company’s financial results for the third quarter of fiscal year 2013. For the third quarter, Dolby reported total revenue of $207.1 million, compared to $210.3 million for the third quarter of fiscal year 2012.
Third quarter GAAP net income was $30.2 million, or $0.29 per diluted share, compared to $51.5 million, or $0.48 per diluted share, for the third quarter of fiscal 2012. On a non-GAAP basis, third quarter net income was $48.5 million, or $0.47 per diluted share, compared to $60.8 million, or $0.57 per diluted share, for the third quarter of fiscal 2012. Dolby’s non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.
“Licensing revenue increased year over year, with growth in our mobile and broadcast businesses offsetting weaker demand for PCs and consumer electronics this quarter,” said Kevin Yeaman, President and CEO, Dolby Laboratories. “While the current consumer-spending environment is weak, we continue to make solid progress on our long-term growth initiatives.”
Financial Outlook
Q4 2013
Dolby anticipates total revenue for the fourth quarter (Q4) of fiscal year 2013 to range from $205 million to $215 million. Gross margin percentages are projected to be approximately 90% on a GAAP basis and 91% on a non-GAAP basis.
Dolby anticipates that operating expenses will be approximately $142 million on a GAAP basis and $124 million on a non-GAAP basis.
Dolby expects diluted earnings per share to be between $0.30 and $0.36 on a GAAP basis and between $0.45 and $0.51 on a non-GAAP basis.
The Company estimates that its fiscal Q4 2013 effective tax rate will range from 27% to 28% on both a GAAP and non-GAAP basis.
FISCAL YEAR 2013
Dolby now anticipates that total revenue for fiscal year 2013 will range from $900 million to $910 million.
Dolby now anticipates that operating expenses will be approximately $574 million on a GAAP basis and $496 million on a non-GAAP basis.
The Company’s Conference Call Information
Members of Dolby management will lead a conference call open to all interested parties to discuss Dolby Laboratories’ third quarter fiscal 2013 financial results at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, July 25, 2013. Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm or by dialing 1-888-329-8903. International callers can access the conference call at 1-719-457-2601.
A replay of the call will be available from 5:00 p.m. PT on Thursday, July 25, 2013, until 9:00 p.m. PT on Thursday, August 1, 2013, by dialing 1-877-870-5176 (international callers can access the replay by dialing 1-858-384-5517) and entering the confirmation code 3172721. An archived version of the teleconference will also be available on the Dolby Laboratories website, www.dolby.com.
Non-GAAP Financial Information
To supplement Dolby’s financial statements presented on a GAAP basis, Dolby provides non-GAAP financial measures of gross margin, operating expense, net income, and diluted earnings per share. These measures are adjusted to exclude amounts related to stock-based compensation, expense associated with dividend equivalents paid on restricted stock units, the amortization of intangibles from business combinations, restructuring charges, and the related tax impact of these items. Dolby presents non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Dolby’s operating results in a manner that focuses on what Dolby’s management believes to be its ongoing business operations. Dolby’s management believes it is useful for itself and investors to review both GAAP and non-GAAP measures in order to assess the performance of Dolby’s business for planning and forecasting in subsequent periods. Dolby’s management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Whenever Dolby uses non-GAAP financial measures, it provides a reconciliation of the non-GAAP financial measures to the most closely applicable GAAP financial measures. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as detailed above. Investors are also encouraged to review Dolby’s GAAP financial statements as reported in its SEC filings. A reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release and on Dolby’s investor relations website at http://investor.dolby.com/medialist.cfm.
Forward-Looking Statements
Certain statements in this press release, including, but not limited to, statements relating to Dolby’s expected financial results for Q4 2013 and fiscal 2013 and Dolby's long-term growth initiatives are “forward-looking statements” that are subject to risks and uncertainties. These forward-looking statements are based on management’s current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those projected. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: risks associated with trends in the markets in which Dolby operates, including the personal computer, DVD, and Blu-ray Disc™, broadcast, consumer electronics, gaming, mobile, and automobile markets; pricing pressures; risks associated with the rate at which original equipment manufacturers (OEMs) include optical disc playback in Windows® 8 devices and the rate of consumer adoption of Windows operating systems; risks that a shift from disc-based media to online media content could result in fewer devices with Dolby® technologies; risks associated with the effects of macroeconomic conditions, including trends in consumer spending; risks relating to the expiration of patents; the timing of Dolby’s receipt of royalty reports and payments from its licensees; Dolby’s accuracy of calculation of royalties due to its licensors; Dolby’s ability to develop, maintain, and strengthen relationships with industry participants; Dolby’s ability to develop and deliver innovative technologies in response to new and growing markets in the entertainment industry; competitive risks; risks associated with conducting business in China and other countries that have historically limited recognition and enforcement of intellectual property and contractual rights; risks associated with the health of the motion picture industry generally; the development and growth of the market for digital cinema and digital 3D and Dolby’s ability to successfully penetrate this market; Dolby’s ability to expand its business generally, and to expand its business beyond sound technologies to other technologies related to digital entertainment delivery, by acquiring and successfully integrating businesses or technologies; and other risks detailed in Dolby’s Securities and Exchange Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in its most recent quarterly report on Form 10-Q. Dolby disclaims any obligation to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise.
About Dolby Laboratories
Dolby Laboratories (NYSE:DLB) is the global leader in technologies that are essential elements in the best entertainment experiences. Founded in 1965 and best known for high-quality audio and surround sound in environments from the cinema to the living room to mobile devices, Dolby creates innovations that enrich entertainment at the movies, at home, or on the go. For more information about Dolby Laboratories or Dolby technologies, please visit www.dolby.com.
Dolby and the double-D symbol are registered trademarks of Dolby Laboratories. Blu-ray Disc is a trademark of the Blu-ray Disc Association. Windows is a registered trademark of Microsoft Corporation. S13 /27158DLB-F
| DOLBY LABORATORIES, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
|
(in thousands, except per share amounts) |
||||||||||||||||
|
(unaudited) |
||||||||||||||||
| Fiscal Quarter Ended | Fiscal Year-to-Date Ended | |||||||||||||||
|
June 28, 2013 |
June 29, 2012 |
June 28, 2013 |
June 29, 2012 |
|||||||||||||
| Revenue: | ||||||||||||||||
| Licensing | $ | 184,707 | $ | 180,886 | $ | 616,038 | $ | 609,159 | ||||||||
| Products | 17,381 | 22,132 | 60,605 | 75,760 | ||||||||||||
| Services | 4,986 | 7,304 | 16,379 | 22,340 | ||||||||||||
| Total revenue | 207,074 | 210,322 | 693,022 | 707,259 | ||||||||||||
| Cost of revenue: | ||||||||||||||||
| Cost of licensing | 4,053 | 2,892 | 13,542 | 9,523 | ||||||||||||
| Cost of products | 16,269 | 14,529 | 47,964 | 46,052 | ||||||||||||
| Cost of services | 4,018 | 3,610 | 11,722 | 9,458 | ||||||||||||
| Total cost of revenue | 24,340 | 21,031 | 73,228 | 65,033 | ||||||||||||
| Gross margin | 182,734 | 189,291 | 619,794 | 642,226 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 42,915 | 35,123 | 127,299 | 102,185 | ||||||||||||
| Sales and marketing | 58,528 | 49,269 | 175,079 | 138,779 | ||||||||||||
| General and administrative | 38,413 | 36,859 | 123,324 | 109,605 | ||||||||||||
| Restructuring charges / (credits) | 5,930 | (85 | ) | 5,930 | 1,193 | |||||||||||
| Total operating expenses | 145,786 | 121,166 | 431,632 | 351,762 | ||||||||||||
| Operating income | 36,948 | 68,125 | 188,162 | 290,464 | ||||||||||||
| Interest income | 820 | 1,513 | 3,063 | 4,664 | ||||||||||||
| Interest expense | (77 | ) | (26 | ) | (504 | ) | (57 | ) | ||||||||
| Other income, net | 156 | 709 | 1,057 | 969 | ||||||||||||
| Income before income taxes | 37,847 | 70,321 | 191,778 | 296,040 | ||||||||||||
| Provision for income taxes | (7,345 | ) | (18,915 | ) | (47,560 | ) | (82,951 | ) | ||||||||
| Net income including controlling interest | 30,502 | 51,406 | 144,218 | 213,089 | ||||||||||||
| Less: net (income) / loss attributable to controlling interest | (286 | ) | 123 | (742 | ) | (281 | ) | |||||||||
| Net income attributable to Dolby Laboratories, Inc. | $ | 30,216 | $ | 51,529 | $ | 143,476 | $ | 212,808 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.30 | $ | 0.48 | $ | 1.41 | $ | 1.97 | ||||||||
| Diluted | $ | 0.29 | $ | 0.48 | $ | 1.39 | $ | 1.96 | ||||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 101,751 | 106,328 | 101,917 | 107,876 | ||||||||||||
| Diluted | 103,031 | 107,202 | 102,999 | 108,493 | ||||||||||||
| DOLBY LABORATORIES, INC. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
|
(in thousands) |
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|
(unaudited) |
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|
June 28, 2013 |
September 28, 2012 |
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| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 408,561 | $ | 492,600 | |||
| Short-term investments | 109,342 | 302,693 | |||||
| Accounts receivable, net | 74,528 | 43,495 | |||||
| Inventories | 12,795 | 16,700 | |||||
| Deferred taxes | 79,114 | 80,966 | |||||
| Prepaid expenses and other current assets | 30,200 | 33,832 | |||||
| Total current assets | 714,540 | 970,286 | |||||
| Long-term investments | 335,371 | 361,614 | |||||
| Property, plant and equipment, net | 245,667 | 254,676 | |||||
| Intangible assets, net | 44,736 | 56,526 | |||||
| Goodwill | 278,718 | 281,375 | |||||
| Deferred taxes | 36,591 | 22,634 | |||||
| Other non-current assets | 11,827 | 13,687 | |||||
| Total assets | $ | 1,667,450 | $ | 1,960,798 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 8,845 | $ | 14,831 | |||
| Accrued liabilities | 119,154 | 116,092 | |||||
| Income taxes payable | 1,012 | 2,424 | |||||
| Deferred revenue | 23,233 | 23,493 | |||||
| Total current liabilities | 152,244 | 156,840 | |||||
| Long-term deferred revenue | 19,073 | 18,192 | |||||
| Deferred taxes | — | 2,696 | |||||
| Other non-current liabilities | 46,271 | 39,837 | |||||
| Total liabilities | 217,588 | 217,565 | |||||
| Stockholders’ equity: | |||||||
| Class A common stock | 47 | 46 | |||||
| Class B common stock | 55 | 57 | |||||
| Additional paid-in capital | 17,111 | — | |||||
| Retained earnings | 1,408,587 | 1,709,479 | |||||
| Accumulated other comprehensive income | 5,812 | 10,687 | |||||
| Total stockholders’ equity – Dolby Laboratories, Inc. | 1,431,612 | 1,720,269 | |||||
| Controlling interest | 18,250 | 22,964 | |||||
| Total stockholders’ equity | 1,449,862 | 1,743,233 | |||||
| Total liabilities and stockholders’ equity | $ | 1,667,450 | $ | 1,960,798 | |||
| DOLBY LABORATORIES, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
|
(in thousands) |
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|
(unaudited) |
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| Fiscal Quarter Ended | Fiscal Year-to-Date Ended | |||||||||||||||
|
June 28, 2013 |
June 29, 2012 |
June 28, 2013 |
June 29, 2012 |
|||||||||||||
| Operating activities: | ||||||||||||||||
| Net income including controlling interest | $ | 30,502 | $ | 51,406 | $ | 144,218 | $ | 213,089 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 13,195 | 11,086 | 39,615 | 31,189 | ||||||||||||
| Stock-based compensation | 17,283 | 10,741 | 49,932 | 34,243 | ||||||||||||
| Amortization of premium on investments | 2,148 | 3,974 | 8,101 | 13,280 | ||||||||||||
| Excess tax benefit from exercise of stock options | (17 | ) | (516 | ) | (621 | ) | (941 | ) | ||||||||
| Provision for doubtful accounts | (359 | ) | 317 | (89 | ) | 449 | ||||||||||
| Deferred income taxes | (2,396 | ) | 2,955 | (12,973 | ) | (7,075 | ) | |||||||||
| Other non-cash items affecting net income | 72 | (2,199 | ) | (800 | ) | 38 | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||
| Accounts receivable | 17,119 | 11,256 | (30,829 | ) | 15,359 | |||||||||||
| Inventories | 6,390 | 4,399 | 5,636 | 5,275 | ||||||||||||
| Prepaid expenses and other assets | 4,023 | 1,710 | 6,924 | 582 | ||||||||||||
| Accounts payable and other liabilities | 1,302 | 11,154 | (840 | ) | (1,567 | ) | ||||||||||
| Income taxes, net | (7,586 | ) | (7,251 | ) | (3,164 | ) | 6,857 | |||||||||
| Deferred revenue | 2,644 | (1,057 | ) | 655 | (221 | ) | ||||||||||
| Other non-current liabilities | 295 | 354 | 1,723 | 2,441 | ||||||||||||
| Net cash provided by operating activities | 84,615 | 98,329 | 207,488 | 312,998 | ||||||||||||
| Investing activities: | ||||||||||||||||
| Purchases of available-for-sale securities | (90,691 | ) | (309,645 | ) | (413,688 | ) | (431,894 | ) | ||||||||
| Proceeds from sales of available-for-sale securities | 67,004 | 156,066 | 534,109 | 261,520 | ||||||||||||
| Proceeds from maturities of available-for-sale securities | 27,900 | 91,400 | 92,850 | 202,915 | ||||||||||||
| Purchases of property, plant and equipment | (5,637 | ) | (19,775 | ) | (17,801 | ) | (50,225 | ) | ||||||||
| Acquisitions, net of cash acquired | — | — | — | (575 | ) | |||||||||||
| Other investments | — | — | (3,000 | ) | — | |||||||||||
| Purchases of intangible assets | — | (350 | ) | (4,050 | ) | (350 | ) | |||||||||
| Proceeds from sales of property, plant and equipment and assets held for sale | — | 273 | 376 | 988 | ||||||||||||
| Net cash provided by / (used in) investing activities | (1,424 | ) | (82,031 | ) | 188,796 | (17,621 | ) | |||||||||
| Financing activities: | ||||||||||||||||
| Proceeds from issuance of common stock | 6,414 | 9,565 | 13,616 | 16,196 | ||||||||||||
| Repurchase of common stock | (8,709 | ) | (103,810 | ) | (74,142 | ) | (189,959 | ) | ||||||||
| Payment of cash dividend | — | — | (408,206 | ) | — | |||||||||||
| Distribution to controlling interest | — | — | (5,039 | ) | — | |||||||||||
| Excess tax benefit from the exercise of stock options | 17 | 516 | 621 | 941 | ||||||||||||
| Shares repurchased for tax withholdings on vesting of restricted stock | (577 | ) | (273 | ) | (5,709 | ) | (3,380 | ) | ||||||||
| Net cash used in financing activities | (2,855 | ) | (94,002 | ) | (478,859 | ) | (176,202 | ) | ||||||||
| Effect of foreign exchange rate changes on cash and cash equivalents | (283 | ) | 124 | (1,464 | ) | (279 | ) | |||||||||
| Net increase / (decrease) in cash and cash equivalents | 80,053 | (77,580 | ) | (84,039 | ) | 118,896 | ||||||||||
| Cash and cash equivalents at beginning of period | 328,508 | 747,988 | 492,600 | 551,512 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 408,561 | $ | 670,408 | $ | 408,561 | $ | 670,408 | ||||||||
| GAAP to Non-GAAP Reconciliations | ||||||||
| (In millions, except per share data) | ||||||||
| The following tables present the Company's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the third fiscal quarter of 2013 and 2012: | ||||||||
| Net income: | Fiscal Quarter Ended | |||||||
|
June 28, 2013 |
June 29, 2012 |
|||||||
| GAAP net income | $ | 30.2 | $ | 51.5 | ||||
|
Stock-based compensation1 |
15.4 | 10.7 | ||||||
| RSU dividend equivalent | 1.1 | — | ||||||
| Amortization of acquired intangibles | 3.3 | 2.5 | ||||||
| Restructuring charges, net | 5.9 | — | ||||||
| Income tax adjustments | (7.4 | ) | (3.9 | ) | ||||
| Non-GAAP net income | $ | 48.5 | $ | 60.8 | ||||
| Diluted earnings per share: | Fiscal Quarter Ended | |||||||
|
June 28, 2013 |
June 29, 2012 |
|||||||
| GAAP diluted earnings per share | $ | 0.29 | $ | 0.48 | ||||
| Stock-based compensation | 0.15 | 0.10 | ||||||
| RSU dividend equivalent | 0.01 | — | ||||||
| Amortization of acquired intangibles | 0.03 | 0.02 | ||||||
| Restructuring charges, net | 0.06 | — | ||||||
| Income tax adjustments | (0.07 | ) | (0.03 | ) | ||||
| Non-GAAP diluted earnings per share | $ | 0.47 | $ | 0.57 | ||||
| Shares used in computing diluted earnings per share (in millions) | 103 | 107 | ||||||
| The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial amounts for the fourth fiscal quarter of 2013 and fiscal year 2013 included in this release: | ||||||||
| Gross margin: | Q4 2013 | |||||||
| GAAP gross margin | 90 | % | ||||||
| Stock-based compensation | — | % | ||||||
| RSU dividend equivalent | — | % | ||||||
| Amortization of acquired intangibles | 1 | % | ||||||
| Non-GAAP gross margin | 91 | % | ||||||
| Operating expenses: | Q4 2013 | Fiscal Year 2013 | ||||||
| GAAP operating expenses | $ | 142 | $ | 574 | ||||
| Stock-based compensation | (16 | ) | (64 | ) | ||||
| RSU dividend equivalent | (1 | ) | (4 | ) | ||||
| Amortization of acquired intangibles | (1 | ) | (4 | ) | ||||
| Restructuring charges, net | — | (6 | ) | |||||
| Non-GAAP operating expenses | $ | 124 | $ | 496 | ||||
| Diluted earnings per share: | Q4 2013 | |||||||
| Low | High | |||||||
| GAAP diluted earnings per share | $ | 0.30 | $ | 0.36 | ||||
| Stock-based compensation | 0.16 | 0.17 | ||||||
| RSU dividend equivalent | 0.01 | 0.01 | ||||||
| Amortization of acquired intangibles | 0.03 | 0.03 | ||||||
| Restructuring charges, net | — | — | ||||||
| Income tax adjustments | (0.05 | ) | (0.06 | ) | ||||
| Non-GAAP diluted earnings per share | $ | 0.45 | $ | 0.51 | ||||
| Shares used in computing diluted earnings per share (in millions) | 103 | 103 | ||||||
|
1 Excludes $1.9 million stock-based compensation expense for previously awarded grants that would have otherwise been recognized over their remaining vesting terms through the second quarter of fiscal 2014. These amounts were associated with an employee terminated under the current restructuring plan and are included in restructuring charges. |
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CONTACT:
Investor Contact:
Dolby Laboratories
Alex
Hughes, 415-645-4572
investor@dolby.com
or
Media
Contact:
Dolby Laboratories
Sean Durkin, 415-645-5176
news@dolby.com