SAN FRANCISCO -- (BUSINESS WIRE) -- Dolby Laboratories, Inc. (NYSE:DLB) today announced the Company’s financial results for the fourth quarter and fiscal year ended September 27, 2013. For the fourth quarter, Dolby reported total revenue of $216.7 million, compared to $225.8 million for the fourth quarter of fiscal year 2012. For fiscal 2013, Dolby reported total revenue of $909.7 million, compared to $933.0 million for fiscal 2012.
Fourth quarter GAAP net income was $45.8 million, or $0.44 per diluted share, compared to $51.5 million, or $0.49 per diluted share, for the fourth quarter of fiscal 2012. On a non-GAAP basis, fourth quarter net income was $58.8 million, or $0.57 per diluted share, compared to $63.8 million, or $0.61 per diluted share, for the fourth quarter of fiscal 2012.
Fiscal year GAAP net income was $189.3 million, or $1.84 per diluted share, compared to $264.3 million, or $2.46 per diluted share, for fiscal 2012. On a non-GAAP basis, fiscal year net income was $250.1 million, or $2.43 per diluted share, compared to $306.9 million, or $2.85 per diluted share, for fiscal 2012. Dolby’s non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.
“Fourth quarter results came in better than expected, as we saw growth in our mobile and broadcast markets,” said Kevin Yeaman, President and CEO, Dolby Laboratories. “Looking beyond these markets, Dolby Voice is our newest offering aimed at driving long term growth. BT recently launched BT MeetMe with Dolby Voice, a service which makes conference calls sound much more like in-person meetings.”
Dolby estimates that total revenue will range from $205 million to $215 million. Gross margin percentages are projected to range between approximately 90 percent to 91 percent on a GAAP basis and 91 percent to 92 percent on a non-GAAP basis.
Dolby anticipates that operating expenses will be approximately $145 million on a GAAP basis and $127 million on a non-GAAP basis.
Dolby expects diluted earnings per share to be between $0.28 and $0.36 on a GAAP basis and $0.42 and $0.50 on a non-GAAP basis.
The Company estimates that its fiscal Q1 2014 effective tax rate will be between approximately 27 percent and 28 percent on both a GAAP and non-GAAP basis.
FISCAL YEAR 2014
Dolby anticipates that total revenue will range from $900 million to $930 million.
Dolby anticipates that operating expenses will be between approximately $590 million and $600 million on a GAAP basis and between $520 million and $530 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’ fourth quarter fiscal 2013 financial results at 2:00 p.m. PT (5:00 p.m. ET) on Tuesday, October 29, 2013.
Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm or by dialing 1-888-233-7976. International callers can access the conference call at 1-913-981-5578.
A replay of the call will be available from 5:00 p.m. PT on Tuesday, October 29, 2013, until 9:00 p.m. PT on November 5, 2013, by dialing 1-877-870-5176 (international callers can access the replay by dialing 1-858-384-5517) and entering the confirmation code 8136638. 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.
Certain statements in this press release, including, but not limited to, statements relating to Dolby’s expected financial results for Q1 2014 and fiscal 2014 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; the loss of, or reduction in sales by, a key customer or licensee; pricing pressures; risks associated with the rate at which 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) creates audio, video, and voice technologies that transform entertainment and communications in mobile devices, at the cinema, at home, and at work. For nearly 50 years, sight and sound experiences have become more vibrant, clear, and meaningful in Dolby. For more information, 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. S13/27416 DLB-F
DOLBY LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
|Fiscal Quarter Ended||Fiscal Year Ended|
|Cost of revenue:|
|Cost of licensing||3,314||3,401||16,856||12,924|
|Cost of products||16,306||20,273||64,270||66,325|
|Cost of services||3,871||3,320||15,593||12,778|
|Total cost of revenue||23,491||26,994||96,719||92,027|
|Research and development||41,447||37,958||168,746||140,143|
|Sales and marketing||56,024||49,707||231,103||188,486|
|General and administrative||38,646||39,570||161,970||149,175|
|Total operating expenses||136,061||127,233||567,693||478,995|
|Other income, net||1,054||(185||)||2,111||784|
|Income before income taxes||58,868||72,951||250,646||368,991|
|Provision for income taxes||(12,784||)||(20,906||)||(60,344||)||(103,857||)|
|Net income including controlling interest||46,084||52,045||190,302||265,134|
|Less: net (income)/loss attributable to controlling interest||(289||)||(551||)||(1,031||)||(832||)|
|Net income attributable to Dolby Laboratories, Inc.||$||45,795||$||51,494||$||189,271||$||264,302|
|Net income per share:|
|Weighted-average shares outstanding:|
DOLBY LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS
|Cash and cash equivalents||$||454,397||$||492,600|
|Accounts receivable, net||97,460||43,495|
|Prepaid expenses and other current assets||32,124||33,832|
|Total current assets||812,722||970,286|
|Property, plant and equipment, net||242,917||254,676|
|Intangible assets, net||41,315||56,526|
|Other non-current assets||11,638||13,687|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Income taxes payable||3,394||2,424|
|Total current liabilities||172,815||156,840|
|Long-term deferred revenue||19,663||18,192|
|Other non-current liabilities||45,441||39,837|
|Class A common stock||47||46|
|Class B common stock||55||57|
|Additional paid-in capital||18,812||—|
|Accumulated other comprehensive income||7,814||10,687|
|Total stockholders’ equity – Dolby Laboratories, Inc.||1,481,110||1,720,269|
|Total stockholders’ equity||1,500,026||1,743,233|
|Total liabilities and stockholders’ equity||$||1,737,945||$||1,960,798|
DOLBY LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|Fiscal Quarter Ended||Fiscal Year Ended|
|Net income including controlling interest||$||46,084||$||52,045||$||190,302||$||265,134|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||13,630||12,687||53,245||43,876|
|Amortization of premium on investments||2,133||3,860||10,234||17,140|
|Excess tax benefit from exercise of stock options||146||89||(475||)||(852||)|
|Provision for doubtful accounts||(85||)||(828||)||(174||)||(379||)|
|Deferred income taxes||(6,669||)||8,283||(19,642||)||1,208|
|Loss on impairment of long-lived assets||—||95||—||275|
|Other non-cash items affecting net income||(226||)||237||(1,026||)||95|
|Changes in operating assets and liabilities:|
|Prepaid expenses and other assets||(3,033||)||(4,690||)||3,891||(4,108||)|
|Accounts payable and other liabilities||22,730||(5,074||)||21,890||(6,641||)|
|Income taxes, net||5,478||(2,991||)||2,314||3,866|
|Other non-current liabilities||(6,400||)||(1,223||)||(4,677||)||1,218|
|Net cash provided by operating activities||67,173||76,799||274,661||389,797|
|Purchases of available-for-sale securities||(68,682||)||(179,317||)||(482,370||)||(611,211||)|
|Proceeds from sales of available-for-sale securities||14,630||96,622||548,739||358,142|
|Proceeds from maturities of available-for-sale securities||50,904||33,620||143,754||236,535|
|Purchases of property, plant and equipment||(8,910||)||(117,124||)||(26,711||)||(167,349||)|
|Acquisitions, net of cash acquired||—||(11,946||)||—||(12,521||)|
|Purchases of intangible assets||—||—||(4,050||)||(350||)|
|Proceeds from sales of property, plant and equipment and assets held for sale||127||1,087||503||2,075|
|Net cash provided by/(used in) investing activities||(11,931||)||(177,058||)||176,865||(194,679||)|
|Payments on debt||(79||)||(518||)||(79||)||(518||)|
|Proceeds from issuance of common stock||2,342||1,190||15,958||17,386|
|Repurchase of common stock||(8,103||)||(78,244||)||(82,245||)||(268,203||)|
|Payment of cash dividend||—||—||(408,206||)||—|
|Distribution to controlling interest||—||—||(5,039||)||—|
|Excess tax benefit from the exercise of stock options||(146||)||(89||)||475||852|
|Shares repurchased for tax withholdings on vesting of restricted stock||(3,119||)||(455||)||(8,828||)||(3,835||)|
|Net cash used in financing activities||(9,105||)||(78,116||)||(487,964||)||(254,318||)|
|Effect of foreign exchange rate changes on cash and cash equivalents||(301||)||567||(1,765||)||288|
|Net increase/(decrease) in cash and cash equivalents||45,836||(177,808||)||(38,203||)||(58,912||)|
|Cash and cash equivalents at beginning of period||408,561||670,408||492,600||551,512|
|Cash and cash equivalents at end of period||$||454,397||$||492,600||$||454,397||$||492,600|
|GAAP to Non-GAAP Reconciliations|
|(In millions, except per share data)|
|The following tables present the Company's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the fourth fiscal quarter of 2013 and 2012 and fiscal 2013 and 2012:|
|Net income:||Fiscal Quarter Ended||Fiscal Year Ended|
|GAAP net income||$||45.8||$||51.5||$||189.3||$||264.3|
|RSU dividend equivalent||1.0||—||
|Amortization of acquired intangibles||3.2||3.1||13.2||10.8|
|Restructuring charges, net||—||—||5.9||1.2|
|Income tax adjustments||(5.6||)||(4.1||)||(24.9||)||(17.0||)|
|Non-GAAP net income||$||58.8||$||63.8||$||250.1||$||306.9|
|Diluted earnings per share:||Fiscal Quarter Ended||Fiscal Year Ended|
|GAAP diluted earnings per share||$||0.44||$||0.49||$||1.84||$||2.46|
|RSU dividend equivalent||0.01||—||0.04||—|
|Amortization of acquired intangibles||0.03||0.03||0.12||0.10|
|Restructuring charges, net||—||—||0.06||0.01|
|Income tax adjustments||(0.05||)||(0.04||)||(0.24||)||(0.16||)|
|Non-GAAP diluted earnings per share||$||0.57||$||0.61||$||2.43||$||2.85|
|Shares used in computing diluted earnings per share (in millions)||103||105||103||108|
|The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial amounts for the first fiscal quarter of 2014 and fiscal year 2014 included in this release:|
|Gross margin:||Q1 2014|
|GAAP gross margin (low - high end of range)||90% - 91%|
|Amortization of acquired intangibles||1%|
|Non-GAAP gross margin (low - high end of range)||91% - 92%|
|Operating expenses:||Q1 2014||Fiscal 2014|
|GAAP operating expenses (low - high end of range)||$||145||$590 - $600|
|RSU dividend equivalent||(1||)||(4||)|
|Amortization of acquired intangibles||(1||)||(4||)|
|Restructuring charges, net||—||—|
|Non-GAAP operating expenses (low - high end of range)||$||127||$520 - $530|
|Diluted earnings per share:||Q1 2014|
|GAAP diluted earnings per share||$||0.28||$||0.36|
|RSU dividend equivalent||0.01||0.01|
|Amortization of acquired intangibles||0.03||0.03|
|Restructuring charges, net||—||—|
|Income tax adjustments||(0.06||)||(0.06||)|
|Non-GAAP diluted earnings per share||$||0.42||$||0.50|
|Shares used in computing diluted earnings per share (in millions)||103||103|