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Dolby Laboratories Reports First Quarter Fiscal 2012 Results
For the first quarter, Dolby reported total revenue of
First quarter GAAP net income was
"In the first quarter, we grew licensing revenue year over year on the
strength of our broadcast and mobile markets," said
Financial Targets
For fiscal 2012, Dolby continues to target revenue of
GAAP
For fiscal 2012, Dolby continues to target total gross margin of
approximately 90 percent, operating expenses of
Non-GAAP
For fiscal 2012, Dolby continues to target total gross margin of
approximately 91 percent, operating expenses of
Diluted Earnings per Share
Dolby continues to target diluted shares outstanding of approximately
110 million. These targets lead to a fiscal 2012 diluted earnings per
share target range of
The Company's Conference Call Information
Members of
Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm
or by dialing 1-888-437-9274 from within
A replay of the call will be available from
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, tax rate, and diluted earnings per share. These measures are
adjusted to exclude the charges and expenses discussed above. Dolby
presents such 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, as applicable,
both GAAP information that includes the impact of stock-based
compensation expense, amortization of intangible assets acquired through
business combinations, restructuring charges, the related tax impact of
all of these items on the provision for income taxes, and a one-time
benefit resulting from the release of a deferred tax liability in the
first quarter of fiscal 2011, and the non-GAAP measures that exclude
such information 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
such non-GAAP financial measures in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP. Whenever
Dolby uses such a non-GAAP financial measure, it provides a
reconciliation of the non-GAAP financial measure to the most closely
applicable GAAP financial measure. 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 measure as detailed above. Investors are also encouraged to
review Dolby's GAAP financial statements as reported in its
Forward-Looking Statements
Certain statements in this press release, including statements relating
to Dolby's expectations regarding revenue, gross margin, operating
expense, other income, tax rate, stock-based compensation, amortization
of intangibles, restructuring charges, and diluted earnings per share
for fiscal 2012, and its statements regarding the strength of its
broadcast and mobile markets, its opportunities with respect to online
content, and the benefits that may be derived from them 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 that Dolby technologies may not be
included in future PC operating systems; 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 that shifts from
disc-based media to online media content could result in fewer devices
with Dolby technologies; risks associated with the effects of
macroeconomic conditions; 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
About
Dolby and the double-D symbol are registered trademarks of
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
Fiscal Quarter Ended | ||||||||
December 31,
2010 |
December 30,
2011 |
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(unaudited) |
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Revenue: | ||||||||
Licensing | $ | 188,176 | $ | 199,624 | ||||
Products | 46,027 | 26,400 | ||||||
Services | 8,509 | 7,354 | ||||||
Total revenue | 242,712 | 233,378 | ||||||
Cost of revenue: | ||||||||
Cost of licensing | 3,961 | 3,328 | ||||||
Cost of products | 22,198 | 13,888 | ||||||
Cost of services | 2,980 | 3,194 | ||||||
Total cost of revenue | 29,139 | 20,410 | ||||||
Gross margin | 213,573 | 212,968 | ||||||
Operating expenses: | ||||||||
Research and development | 28,327 | 32,826 | ||||||
Sales and marketing | 38,217 | 43,016 | ||||||
General and administrative | 37,042 | 35,465 | ||||||
Restructuring charges, net | 785 | 368 | ||||||
Total operating expenses | 104,371 | 111,675 | ||||||
Operating income | 109,202 | 101,293 | ||||||
Other income, net | 1,864 | 1,911 | ||||||
Income before provision for income taxes | 111,066 | 103,204 | ||||||
Provision for income taxes | (24,301 | ) | (29,838 | ) | ||||
Net income including controlling interest | 86,765 | 73,366 | ||||||
Less: net (income) / loss attributable to controlling interest | (378 | ) | (207 | ) | ||||
Net income attributable to |
$ | 86,387 | $ | 73,159 | ||||
Basic earnings per share | $ | 0.77 | $ | 0.67 | ||||
Diluted earnings per share | $ | 0.76 | $ | 0.67 | ||||
Weighted-average shares outstanding (basic) | 112,035 | 108,884 | ||||||
Weighted-average shares outstanding (diluted) | 113,713 | 109,443 |
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CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
September 30, |
December 30, |
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(unaudited) | ||||||
(in thousands) | ||||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 551,512 | $ | 654,414 | ||
Short-term investments | 391,281 | 367,412 | ||||
Accounts receivable, net | 61,815 | 54,211 | ||||
Inventories | 26,244 | 33,515 | ||||
Deferred taxes | 90,869 | 92,582 | ||||
Prepaid expenses and other current assets | 36,877 | 26,916 | ||||
Total current assets | 1,158,598 | 1,229,050 | ||||
Long-term investments | 272,797 | 247,273 | ||||
Property, plant and equipment, net | 117,107 | 123,536 | ||||
Intangible assets, net | 51,573 | 47,922 | ||||
Goodwill | 263,260 | 263,780 | ||||
Deferred taxes | 14,779 | 20,390 | ||||
Other non-current assets | 6,273 | 7,169 | ||||
Total assets | $ | 1,884,387 | $ | 1,939,120 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | $ | 127,922 | $ | 106,558 | ||
Income taxes payable | 4,762 | 18,662 | ||||
Deferred revenue | 26,701 | 24,412 | ||||
Total current liabilities | 159,385 | 149,632 | ||||
Long-term deferred revenue | 15,526 | 17,124 | ||||
Deferred taxes | 671 | 639 | ||||
Other non-current liabilities | 23,455 | 27,637 | ||||
Total liabilities | 199,037 | 195,032 | ||||
Stockholders' equity: | ||||||
Class A common stock | 52 | 52 | ||||
Class B common stock | 58 | 57 | ||||
Additional paid-in capital | 210,681 | 196,545 | ||||
Retained earnings | 1,445,189 | 1,518,348 | ||||
Accumulated other comprehensive income | 7,533 | 7,108 | ||||
Total stockholders' equity - |
1,663,513 | 1,722,110 | ||||
Controlling interest | 21,837 | 21,978 | ||||
Total stockholders' equity | 1,685,350 | 1,744,088 | ||||
Total liabilities and stockholders' equity | $ | 1,884,387 | $ | 1,939,120 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Fiscal Quarter Ended | ||||||||
December 31, |
December 30, |
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(unaudited) | ||||||||
(in thousands) | ||||||||
Operating activities: | ||||||||
Net income including controlling interest | $ | 86,765 | $ | 73,366 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 9,539 | 9,929 | ||||||
Stock-based compensation expense | 11,260 | 11,439 | ||||||
Amortization of premium on investments | 3,235 | 4,920 | ||||||
Excess tax benefit from exercise of stock options | (9,386 | ) | (57 | ) | ||||
Provision for doubtful accounts | 333 | (52 | ) | |||||
Deferred taxes | (6,640 | ) | (7,643 | ) | ||||
Other non-cash items affecting net income | (476 | ) | 1,227 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (14,789 | ) | 7,531 | |||||
Inventories | 536 | (7,271 | ) | |||||
Prepaid expenses and other assets | (1,450 | ) | 1,101 | |||||
Accounts payable and accrued liabilities | (27,815 | ) | (22,860 | ) | ||||
Income taxes, net | 20,510 | 24,431 | ||||||
Deferred revenues | (843 | ) | (661 | ) | ||||
Other non-current liabilities | (127 | ) | 392 | |||||
Net cash provided by operating activities | 70,652 | 95,792 | ||||||
Investing activities: | ||||||||
Purchases of available-for-sale securities | (309,660 | ) | (54,726 | ) | ||||
Proceeds from sales and maturities of available-for-sale securities | 159,825 | 99,133 | ||||||
Purchases of property, plant and equipment | (9,646 | ) | (12,566 | ) | ||||
Acquisitions, net of cash acquired | (3,350 | ) | (575 | ) | ||||
Proceeds from sales of property, plant and equipment and assets held for sale | 621 | 335 | ||||||
Net cash provided by/(used in) investing activities | (162,210 | ) | 31,601 | |||||
Financing activities: | ||||||||
Proceeds from issuance of common stock, net of shares withheld for taxes | 15,749 | 1,783 | ||||||
Repurchase of common stock | (45,966 | ) | (26,068 | ) | ||||
Excess tax benefit from exercise of stock options | 9,386 | 57 | ||||||
Net cash used in financing activities | (20,831 | ) | (24,228 | ) | ||||
Effect of foreign exchange rate changes on cash and cash equivalents | 166 | (263 | ) | |||||
Net increase/(decrease) in cash and cash equivalents | (112,223 | ) | 102,902 | |||||
Cash and cash equivalents at beginning of period | 545,861 | 551,512 | ||||||
Cash and cash equivalents at end of period | $ | 433,638 | $ | 654,414 |
GAAP to Non-GAAP Reconciliations | ||||||||
(In millions, except per share data) | ||||||||
The following tables show the Company's first quarter of fiscal years 2011 and 2012 GAAP financial measures reconciled to non-GAAP financial measures included in this release: | ||||||||
Net income: |
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GAAP net income | $ | 86.4 | $ | 73.2 | ||||
Stock-based compensation | 11.3 | 11.4 | ||||||
Amortization of acquired intangibles | 2.9 | 2.7 | ||||||
Restructuring charges, net | 0.8 | 0.4 | ||||||
Income tax adjustments | (16.4 | ) | (4.6 | ) | ||||
Non-GAAP net income | $ | 85.0 | $ | 83.1 | ||||
Diluted earnings per share: |
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GAAP diluted earnings per share | $ | 0.76 | $ | 0.67 | ||||
Stock-based compensation | 0.10 | 0.10 | ||||||
Amortization of acquired intangibles | 0.02 | 0.03 | ||||||
Restructuring charges, net | 0.01 | - | ||||||
Income tax adjustments | (0.14 | ) | (0.04 | ) | ||||
Non-GAAP diluted earnings per share | $ | 0.75 | $ | 0.76 | ||||
Shares used in computing diluted earnings per share | 114 | 109 | ||||||
The following tables show the Company's fiscal year 2012 GAAP financial targets reconciled to non-GAAP financial targets included in this release (numbers are approximate): | ||||||||
Gross margin: | ||||||||
Fiscal Year 2012 | ||||||||
GAAP gross margin | 90 | % | ||||||
Stock-based compensation | 0 | % | ||||||
Amortization of acquired intangibles | 1 | % | ||||||
Non-GAAP gross margin | 91 | % | ||||||
Product gross margin: | Fiscal Year 2012 | |||||||
Low | High | |||||||
GAAP products gross margin | 37 | % | 39 | % | ||||
Stock-based compensation | 1 | % | 1 | % | ||||
Amortization of acquired intangibles | 2 | % | 2 | % | ||||
Non-GAAP products gross margin | 40 | % | 42 | % | ||||
Operating expenses: | Fiscal Year 2012 | |||||||
Low | High | |||||||
GAAP operating expenses | $ | 465 | $ | 475 | ||||
Stock-based compensation | (50 | ) | (50 | ) | ||||
Amortization of acquired intangibles | (3 | ) | (3 | ) | ||||
Restructuring charges, net | (2 | ) | (2 | ) | ||||
Non-GAAP operating expenses | $ | 410 | $ | 420 | ||||
Diluted earnings per share: | Fiscal Year 2012 | |||||||
Low | High | |||||||
GAAP diluted earnings per share | $ | 2.31 | $ | 2.61 | ||||
Stock-based compensation | 0.46 | 0.46 | ||||||
Amortization of acquired intangibles | 0.09 | 0.09 | ||||||
Restructuring charges, net | 0.02 | 0.02 | ||||||
Income tax adjustments | (0.17 | ) | (0.16 | ) | ||||
Non-GAAP diluted earnings per share | $ | 2.71 | $ | 3.02 | ||||
Shares used in computing diluted earnings per share | 110 | 110 |
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investor@dolby.com
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