Dolby Investor Relations

Dolby Laboratories Reports First Quarter Fiscal 2008 Results

All Press Releases

Jan 31, 2008

Dolby Laboratories Reports First Quarter Fiscal 2008 Results

SAN FRANCISCO, Jan 31, 2008 (BUSINESS WIRE) -- Dolby Laboratories, Inc. (NYSE:DLB) today announced the Company's financial results for its first quarter of fiscal 2008.

For the first quarter, Dolby reported total revenue of $150.2 million, compared to $104.4 million for the first quarter of fiscal 2007, an increase of 44 percent. First quarter net income was $47.7 million, or $0.42 per diluted share, compared to $29.9 million, or $0.27 per diluted share, for the first quarter of fiscal 2007.

Net income for the first quarter of fiscal 2008 reflected stock-based compensation expense of $5.5 million compared to $4.9 million for the first quarter of fiscal 2007. Net income for the first quarter of fiscal 2008 includes charges related to the amortization of intangibles of $2.3 million compared to $0.5 million for the first quarter of fiscal 2007.

"Our first quarter results demonstrate Dolby's strength across a broad range of entertainment platforms including DVD, PC, broadcast, cinema, and gaming," said Bill Jasper, President and Chief Executive Officer, Dolby Laboratories. "We remain focused on innovation and being an essential element in the best entertainment technologies used by professionals and consumers."

Guidance

Dolby now expects fiscal 2008 revenue to be $575 million to $615 million. Net income is now expected to be $157 million to $167 million. Earnings per diluted share are now expected to be $1.34 to $1.44. While under FAS 123R, stock-based compensation expense may vary based on factors such as stock price or volatility, Dolby now expects stock-based compensation expense for the full year to be $19 million to $21 million. In addition, Dolby expects charges related to the amortization of intangibles for fiscal 2008 to be approximately $12 million, compared to $3.3 million in fiscal 2007.

The Company's Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss Dolby Laboratories' Q1 fiscal 2008 financial results at 2:00 p.m. PT/5:00 p.m. ET, Thursday, January 31, 2008.

Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm or by dialing 800-762-8779. International callers can access the conference call at 480-629-9041.

A replay of the call will be available beginning at 5:00 p.m. PT on January 31 until 9:00 p.m. on February 7, 2008; dial 800-406-7325 (international callers can access the replay by dialing 303-590-3030) and enter confirmation code 3832223. An archived version of the teleconference will also be available on Dolby Laboratories' website, www.dolby.com.

Forward-Looking Statements

Certain statements in this press release, including statements relating to Dolby's expectations regarding revenue, including net income, earnings per diluted share, stock-based compensation expense and charges relating to the amortization of intangibles for the fiscal year ending September 26, 2008, Dolby's strength across a broad range of entertainment platforms, Dolby's focus on innovation and having its technologies included as an essential element in entertainment technologies used by professionals and consumers, including long-term growth opportunities that may be derived therefrom, 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 DVD and next-generation DVD, broadcast, personal computer, gaming, mobile, or portable device markets, and trends relating to the development of additional and newer markets for Dolby technologies; the timing of a potential US or foreign economic recession; pricing pressures; the timing of Dolby's receipt of royalty reports and/or 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 Periodic Report on Form 10-Q or 10-K. 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) develops and delivers products and technologies that make the entertainment experience more realistic and immersive. For more than four decades, Dolby has been at the forefront of defining high-quality audio and surround sound in cinema, broadcast, home audio systems, cars, DVDs, headphones, games, televisions, and personal computers. For more information about Dolby Laboratories or Dolby(R) technologies, please visit www.dolby.com.

Dolby and the double-D symbol are registered trademarks of Dolby Laboratories. S08/19197 DLB-F

                       DOLBY LABORATORIES, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                               Fiscal Quarter Ended
                                             -------------------------
                                             December 29, December 28,
                                                 2006         2007
                                             ------------ ------------
                                                    (unaudited)
                                             (in thousands, except per
                                                   share amounts)
Revenue:
  Licensing                                   $   82,375   $  122,430
  Product sales                                   15,210       20,010
  Services                                         6,857        7,787
                                             ------------ ------------
    Total revenue                                104,442      150,227
                                             ------------ ------------

Cost of revenue:
  Cost of licensing                                7,660        3,263
  Cost of product sales (1)                        8,686       11,648
  Cost of services (1)                             2,683        3,055
                                             ------------ ------------
    Total cost of revenue                         19,029       17,966
                                             ------------ ------------
Gross margin                                      85,413      132,261
                                             ------------ ------------
Operating expenses:
  Selling, general and administrative (1)         37,311       50,986
  Research and development (1)                     8,836       13,907
                                             ------------ ------------
    Total operating expenses                      46,147       64,893
                                             ------------ ------------
Operating income                                  39,266       67,368
Other income, net                                  5,427        5,204
                                             ------------ ------------
Income before provision for income taxes and
 controlling interest                             44,693       72,572
Provision for income taxes                        14,452       24,607
                                             ------------ ------------
Income before controlling interest                30,241       47,965
Controlling interest in net income                  (348)        (292)
                                             ------------ ------------
Net income                                    $   29,893   $   47,673
                                             ============ ============


Earnings per share (basic)                    $     0.28   $     0.43
Earnings per share (diluted)                  $     0.27   $     0.42

Weighted-average shares outstanding (basic)      107,947      110,592
Weighted-average shares outstanding
 (diluted)                                       112,767      114,700


(1) Stock-based compensation included above was classified as follows:

   Cost of product sales                      $      218   $      241
   Cost of services                                   37           40
   Selling, general and administrative             3,859        4,295
   Research and development                          747          890

                       DOLBY LABORATORIES, INC.
                CONDENSED CONSOLIDATED BALANCE SHEETS

                                            September 28, December 28,
                                                2007          2007
                                            ------------- ------------
                                                   (unaudited)
                                                  (in thousands)
                  ASSETS
Current assets:
  Cash and cash equivalents                  $    368,467 $    280,246
  Short-term investments                          231,217      200,727
  Accounts receivable, net                         28,165       37,955
  Inventories                                      14,883       14,585
  Deferred income taxes                            73,686       76,086
  Prepaid expenses and other current assets        17,000       19,585
                                            ------------- ------------
    Total current assets                          733,418      629,184
Property, plant and equipment, net                 85,552       85,079
Intangible assets, net                             35,389       93,672
Goodwill                                           39,364      258,967
Long-term investments                              73,224       29,301
Long-term deferred income taxes                    12,393       17,887
Other assets                                       12,357       12,541
                                            ------------- ------------
   Total assets                              $    991,697 $  1,126,631
                                            ============= ============

   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued liabilities   $    119,068 $    138,488
  Income taxes payable                              9,051       15,155
  Current portion of debt                           1,563        1,571
  Deferred revenue                                 13,522       18,358
                                            ------------- ------------
    Total current liabilities                     143,204      173,572
Long-term debt                                      9,691        9,209
Long-term deferred revenue                          5,073        4,932
Other non-current liabilities                      14,294       49,709
                                            ------------- ------------
    Total liabilities                             172,262      237,422
Controlling interest                               22,279       22,031
Stockholders' equity:
  Class A common stock                                 49           50
  Class B common stock                                 61           61
  Additional paid-in capital                      375,830      392,999
  Retained earnings                               409,749      457,710
  Accumulated other comprehensive income           11,467       16,358
                                            ------------- ------------
    Total stockholders' equity                    797,156      867,178
                                            ------------- ------------
   Total liabilities and stockholders'
    equity                                   $    991,697 $  1,126,631
                                            ============= ============

SOURCE: Dolby Laboratories, Inc.

Dolby Laboratories
Investor:
Alex Hughes, 415-645-4572
investor@dolby.com
or
Media:
Jeanne Alford, 415-645-5000
news@dolby.com

Copyright Business Wire 2008

News Provided by COMTEX