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Dolby Laboratories Reports Fiscal 2013 Fourth Quarter and Year-End Financial Results

Oct 29, 2013

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."

Financial Outlook

Q1 2014

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.

Forward-Looking Statements

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)

(unaudited)

       
Fiscal Quarter Ended     Fiscal Year Ended  

September 27,
2013

   

September 28,
2012

   

September 27,
2013

   

September 28,
2012

 
Revenue:
Licensing $ 191,043 $ 192,154 $ 807,081 $ 801,313
Products 19,998 27,628 80,603 103,388
Services 5,611     5,973     21,990     28,313  
Total revenue 216,652     225,755     909,674     933,014  
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  
Gross margin 193,161     198,761     812,955     840,987  
Operating expenses:
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
Restructuring charges/(credits) (56 )   (2 )   5,874     1,191  
Total operating expenses 136,061     127,233     567,693     478,995  
Operating income 57,100 71,528 245,262 361,992
Interest income 785 1,747 3,848 6,411
Interest expense (71 ) (139 ) (575 ) (196 )
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:
Basic $ 0.45 $ 0.49 $ 1.86 $ 2.47
Diluted $ 0.44 $ 0.49 $ 1.84 $ 2.46
Weighted-average shares outstanding:
Basic 101,768 104,079 101,879 106,926
Diluted 102,976 104,915 102,788 107,541
 

DOLBY LABORATORIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

   
September 27,
2013
  September 28,
2012
ASSETS