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Dolby Laboratories Reports First Quarter Fiscal 2015 Financial Results
First quarter GAAP net income was
"We had a solid start to the year driven by the strength of our
broadcast business," said
Acquisition of Doremi Labs Completed During the Quarter
As previously announced on
Dividend
Financial Outlook
Q2 2015
Fiscal Year 2015
Conference Call Information
Members of
A replay of the call will be available from
Non-GAAP Financial Information
To supplement
Forward-Looking Statements
Certain statements in this press release, including, but not limited to,
statements relating to
About
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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in thousands, except per share amounts) |
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Fiscal Quarter Ended | ||||||||
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2014 | 2013 | |||||||
Revenue: | (unaudited) | (unaudited) | ||||||
Licensing | $ | 216,598 | $ | 205,660 | ||||
Products | 13,263 | 18,104 | ||||||
Services | 4,377 | 7,513 | ||||||
Total revenue | 234,238 | 231,277 | ||||||
Cost of revenue: | ||||||||
Cost of licensing | 3,481 | 4,001 | ||||||
Cost of products | 12,584 | 13,788 | ||||||
Cost of services | 3,345 | 3,593 | ||||||
Total cost of revenue | 19,410 | 21,382 | ||||||
Gross margin | 214,828 | 209,895 | ||||||
Operating expenses: | ||||||||
Research and development | 48,594 | 44,463 | ||||||
Sales and marketing | 68,018 | 60,379 | ||||||
General and administrative | 44,716 | 41,908 | ||||||
Restructuring charges/(credits) | (39 | ) | 3,215 | |||||
Total operating expenses | 161,289 | 149,965 | ||||||
Operating income | 53,539 | 59,930 | ||||||
Other income/expense: | ||||||||
Interest income | 900 | 654 | ||||||
Interest expense | (15 | ) | (112 | ) | ||||
Other income/(expense), net | (108 | ) | 229 | |||||
Total other income/expense | 777 | 771 | ||||||
Income before income taxes | 54,316 | 60,701 | ||||||
Provision for income taxes | (12,379 | ) | (15,455 | ) | ||||
Net income including controlling interest | 41,937 | 45,246 | ||||||
Less: net (income) attributable to controlling interest | (580 | ) | (731 | ) | ||||
Net income attributable to |
$ | 41,357 | $ | 44,515 | ||||
Net Income Per Share: | ||||||||
Basic | $ | 0.40 | $ | 0.44 | ||||
Diluted | $ | 0.40 | $ | 0.43 | ||||
Weighted-Average Shares Outstanding: | ||||||||
Basic | 102,303 | 101,750 | ||||||
Diluted | 104,275 | 103,192 | ||||||
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INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except share and per share amounts) |
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2014 | 2014 | ||||||
ASSETS | (unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 409,115 | $ | 568,472 | |||
Restricted cash | 2,040 | 2,142 | |||||
Short-term investments | 211,443 | 231,208 | |||||
Accounts receivable, net | 117,240 | 86,168 | |||||
Inventories | 28,291 | 8,536 | |||||
Deferred taxes | 86,937 | 86,445 | |||||
Prepaid expenses and other current assets | 37,092 | 22,880 | |||||
Total current assets | 892,158 | 1,005,851 | |||||
Long-term investments | 318,448 | 296,335 | |||||
Property, plant and equipment, net | 330,249 | 289,755 | |||||
Intangible assets, net | 108,220 | 63,700 | |||||
Goodwill | 315,791 | 277,574 | |||||
Deferred taxes | 48,212 | 41,746 | |||||
Other non-current assets | 9,341 | 9,051 | |||||
Total assets | $ | 2,022,419 | $ | 1,984,012 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 9,973 | $ | 15,898 | |||
Accrued liabilities | 159,360 | 158,376 | |||||
Income taxes payable | 1,754 | 2,600 | |||||
Deferred revenue | 21,236 | 12,496 | |||||
Total current liabilities | 192,323 | 189,370 | |||||
Long-term deferred revenue | 23,203 | 19,279 | |||||
Other non-current liabilities | 55,793 | 43,715 | |||||
Total liabilities | 271,319 | 252,364 | |||||
Stockholders' equity: | |||||||
Class A common stock | 52 | 51 | |||||
Class B common stock | 51 | 52 | |||||
Additional paid-in capital | 45,479 | 46,415 | |||||
Retained earnings | 1,691,614 | 1,660,485 | |||||
Accumulated other comprehensive income | (2,188 | ) | 3,014 | ||||
Total stockholders' equity - |
1,735,008 | 1,710,017 | |||||
Controlling interest | 16,092 | 21,631 | |||||
Total stockholders' equity | 1,751,100 | 1,731,648 | |||||
Total liabilities and stockholders' equity | $ | 2,022,419 | $ | 1,984,012 | |||
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INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) |
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Fiscal Quarter Ended | ||||||||
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2014 | 2013 | |||||||
Operating activities: | (unaudited) | (unaudited) | ||||||
Net income including controlling interest | $ | 41,937 | $ | 45,246 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 16,524 | 12,409 | ||||||
Stock-based compensation | 17,842 | 15,054 | ||||||
Amortization of premium on investments | 2,391 | 2,266 | ||||||
Excess tax benefit from exercise of stock options | (1,944 | ) | (1,010 | ) | ||||
Provision for doubtful accounts | (376 | ) | 374 | |||||
Deferred income taxes | (6,310 | ) | (1,322 | ) | ||||
Other non-cash items affecting net income | 653 | 105 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (22,442 | ) | 21,148 | |||||
Inventories | (2,997 | ) | 2,225 | |||||
Prepaid expenses and other assets | (4,473 | ) | (1,631 | ) | ||||
Accounts payable and other liabilities | (46,801 | ) | (16,696 | ) | ||||
Income taxes, net | 3,692 | 4,795 | ||||||
Deferred revenue | 4,452 | (5,897 | ) | |||||
Other non-current liabilities | 1,297 | 216 | ||||||
Net cash provided by operating activities | 3,445 | 77,282 | ||||||
Investing activities: | ||||||||
Purchase of investments | (110,508 | ) | (102,717 | ) | ||||
Proceeds from sales of investment securities | 63,454 | 27,426 | ||||||
Proceeds from maturities of investment securities | 42,700 | 46,739 | ||||||
Purchases of property, plant and equipment | (21,661 | ) | (8,967 | ) | ||||
Acquisitions, net of cash acquired | (93,516 | ) | — | |||||
Purchase of intangible assets | (6,416 | ) | — | |||||
Proceeds from sale of property, plant and equipment and assets held for sale | 3 | 42 | ||||||
Change in restricted cash | 102 | (174 | ) | |||||
Net cash used in investing activities | (125,842 | ) | (37,651 | ) | ||||
Financing activities: | ||||||||
Proceeds from issuance of common stock | 7,512 | 8,127 | ||||||
Repurchase of common stock | (16,953 | ) | (11,660 | ) | ||||
Payment of cash dividend | (10,228 | ) | — | |||||
Distribution to controlling interest | (5,591 | ) | — | |||||
Excess tax benefit from the exercise of stock options | 1,944 | 1,010 | ||||||
Shares repurchased for tax withholdings on vesting of restricted stock | (10,846 | ) | (6,727 | ) | ||||
Net cash used in financing activities | (34,162 | ) | (9,250 | ) | ||||
Effect of foreign exchange rate changes on cash and cash equivalents | (2,798 | ) | (138 | ) | ||||
Net increase/(decrease) in cash and cash equivalents | (159,357 | ) | 30,243 | |||||
Cash and cash equivalents at beginning of period | 568,472 | 454,397 | ||||||
Cash and cash equivalents at end of period | $ | 409,115 | $ | 484,640 | ||||
GAAP to Non-GAAP Reconciliations | ||||||||
(In millions, except per share data) | ||||||||
The following tables present |
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Net income: | Fiscal Quarter Ended | |||||||
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2014 | 2013 | |||||||
GAAP net income | $ | 41.4 | $ | 44.5 | ||||
Stock-based compensation | 17.8 | 15.1 | ||||||
RSU dividend equivalent | 0.7 | 0.8 | ||||||
Amortization of acquired intangibles | 4.0 | 2.8 | ||||||
Restructuring charges, net | — | 3.2 | ||||||
Income tax adjustments | (5.4 | ) | (5.8 | ) | ||||
Non-GAAP net income | $ | 58.5 | $ | 60.6 | ||||
Diluted earnings per share: | Fiscal Quarter Ended | |||||||
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2014 | 2013 | |||||||
GAAP diluted earnings per share | $ | 0.40 | $ | 0.43 | ||||
Stock-based compensation | 0.17 | 0.15 | ||||||
RSU dividend equivalent | 0.01 | 0.01 | ||||||
Amortization of acquired intangibles | 0.04 | 0.03 | ||||||
Restructuring charges, net | — | 0.03 | ||||||
Income tax adjustments | (0.06 | ) | (0.06 | ) | ||||
Non-GAAP diluted earnings per share | $ | 0.56 | $ | 0.59 | ||||
Shares used in computing diluted earnings per share (in millions) | 104 | 103 | ||||||
The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial amounts for the second quarter of fiscal 2015 and fiscal year 2015 included in this release: | ||||||||
Gross margin: | Q2 2015 | |||||||
GAAP gross margin (low - high end of range) |
90% - 91 |
% |
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Stock-based compensation | 0.1 | % | ||||||
Amortization of acquired intangibles | 0.9 | % | ||||||
Non-GAAP gross margin (low - high end of range) |
91% - 92 |
% |
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Operating expenses: | Q2 2015 | Fiscal 2015 | ||||||
GAAP operating expenses (low - high end of range) |
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Stock-based compensation | (16 | ) | (69 | ) | ||||
RSU dividend equivalent | (1 | ) | (3 | ) | ||||
Amortization of acquired intangibles | (2 | ) | (7 | ) | ||||
Non-GAAP operating expenses (low - high end of range) |
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Diluted earnings per share: | Q2 2015 | |||||||
Low | High | |||||||
GAAP diluted earnings per share | $ | 0.45 | $ | 0.51 | ||||
Stock-based compensation | 0.16 | 0.16 | ||||||
RSU dividend equivalent | 0.01 | 0.01 | ||||||
Amortization of acquired intangibles | 0.04 | 0.04 | ||||||
Income tax adjustments | (0.06 | ) | (0.06 | ) | ||||
Non-GAAP diluted earnings per share | $ | 0.60 | $ | 0.66 | ||||
Shares used in computing diluted earnings per share (in millions) | 104 | 104 |
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