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Dolby Laboratories Reports Fiscal 2011 Fourth Quarter and Year-End Financial Results
For the fourth quarter,
Fourth quarter GAAP net income was
Fiscal year GAAP net income was
"We continued to see solid growth from our broadcast market in the
fourth quarter, helping licensing revenue finish up 11 percent for the
fiscal year," said
Financial Targets
For fiscal 2012,
GAAP
For fiscal 2012,
Non-GAAP
For fiscal 2012,
Diluted Earnings Per Share
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 1-888-329-8903 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,
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 continued broadcast growth
opportunities, and extending its technologies to online content and a
growing array of portable devices, 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
About
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||
Fiscal Quarter Ended | Fiscal Year Ended | ||||||||||||||||||
September 24, |
September 30, |
September 24, |
September 30, |
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(in thousands, except per share amounts) | |||||||||||||||||||
Revenue: | |||||||||||||||||||
Licensing | $ | 178,429 | $ | 205,747 | $ | 710,474 | $ | 790,340 | |||||||||||
Products | 40,255 | 30,842 | 180,402 | 131,611 | |||||||||||||||
Services | 9,123 | 7,179 | 31,837 | 33,554 | |||||||||||||||
Total revenue | 227,807 | 243,768 | 922,713 | 955,505 | |||||||||||||||
Cost of revenue: | |||||||||||||||||||
Cost of licensing | 4,283 | 3,793 | 17,565 | 17,620 | |||||||||||||||
Cost of products (1) | 18,653 | 18,779 | 90,695 | 81,328 | |||||||||||||||
Cost of services (1) | 3,407 | 3,070 | 13,961 | 12,223 | |||||||||||||||
Impairment of products provided under operating leases | - | - | 9,594 | - | |||||||||||||||
Total cost of revenue | 26,343 | 25,642 | 131,815 | 111,171 | |||||||||||||||
Gross margin | 201,464 | 218,126 | 790,898 | 844,334 | |||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development (1) | 29,417 | 33,108 | 104,978 | 123,920 | |||||||||||||||
Sales and marketing (1) | 36,525 | 37,154 | 130,160 | 149,642 | |||||||||||||||
General and administrative (1) | 32,676 | 33,039 | 119,353 | 137,633 | |||||||||||||||
Restructuring charges, net | 5,655 | 2,669 | 7,026 | 3,406 | |||||||||||||||
Total operating expenses | 104,273 | 105,970 | 361,517 | 414,601 | |||||||||||||||
Operating income | 97,191 | 112,156 | 429,381 | 429,733 | |||||||||||||||
Other income, net | 1,431 | 4,476 | 7,631 | 10,910 | |||||||||||||||
Income before provision for income taxes | 98,622 | 116,632 | 437,012 | 440,643 | |||||||||||||||
Provision for income taxes | (35,295 | ) | (37,344 | ) | (154,185 | ) | (130,061 | ) | |||||||||||
Net income including controlling interest | 63,327 | 79,288 | 282,827 | 310,582 | |||||||||||||||
Less: net (income) / loss attributable to controlling interest | 1,684 | (217 | ) | 620 | (1,315 | ) | |||||||||||||
Net income attributable to |
$ | 65,011 | $ | 79,071 | $ | 283,447 | $ | 309,267 | |||||||||||
Basic earnings per share | $ | 0.58 | $ | 0.72 | $ | 2.50 | $ | 2.78 | |||||||||||
Diluted earnings per share | $ | 0.57 | $ | 0.71 | $ | 2.46 | $ | 2.75 | |||||||||||
Weighted-average shares outstanding (basic) | 112,486 | 110,063 | 113,452 | 111,444 | |||||||||||||||
Weighted-average shares outstanding (diluted) | 114,276 | 110,662 | 115,388 | 112,554 | |||||||||||||||
(1) Stock-based compensation included above was classified as follows: | |||||||||||||||||||
Cost of products | $ | 115 | $ | 159 | $ | 427 | $ | 642 | |||||||||||
Cost of services | 34 | 53 | 126 | 182 | |||||||||||||||
Research and development | 1,922 | 2,591 | 6,535 | 10,157 | |||||||||||||||
Sales and marketing | 2,321 | 3,392 | 8,843 | 13,184 | |||||||||||||||
General and administrative | 3,408 | 4,554 | 12,884 | 19,500 | |||||||||||||||
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CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
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(unaudited) | |||||||
(in thousands) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 545,861 | $ | 551,512 | |||
Short-term investments | 302,269 | 391,281 | |||||
Accounts receivable, net | 54,257 | 61,815 | |||||
Inventories | 28,338 | 26,244 | |||||
Deferred taxes | 102,758 | 90,869 | |||||
Prepaid expenses and other current assets | 26,930 | 36,877 | |||||
Total current assets | 1,060,413 | 1,158,598 | |||||
Long-term investments | 190,837 | 272,797 | |||||
Property, plant and equipment, net | 94,097 | 117,107 | |||||
Intangible assets, net | 67,019 | 51,573 | |||||
Goodwill | 264,580 | 263,260 | |||||
Deferred taxes | 19,948 | 14,779 | |||||
Other non-current assets | 14,878 | 6,273 | |||||
Total assets | $ | 1,711,772 | $ | 1,884,387 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 148,214 | $ | 127,922 | |||
Income taxes payable | 7,895 | 4,762 | |||||
Deferred revenue | 9,647 | 26,701 | |||||
Total current liabilities | 165,756 | 159,385 | |||||
Long-term deferred revenue | 12,775 | 15,526 | |||||
Deferred taxes | 11,547 | 671 | |||||
Other non-current liabilities | 27,015 | 23,455 | |||||
Total liabilities | 217,093 | 199,037 | |||||
Stockholders' equity: | |||||||
Class A common stock | 53 | 52 | |||||
Class B common stock | 59 | 58 | |||||
Additional paid-in capital | 329,902 | 210,681 | |||||
Retained earnings | 1,135,922 | 1,445,189 | |||||
Accumulated other comprehensive income | 7,801 | 7,533 | |||||
Total stockholders' equity - |
1,473,737 | 1,663,513 | |||||
Controlling interest | 20,942 | 21,837 | |||||
Total stockholders' equity | 1,494,679 | 1,685,350 | |||||
Total liabilities and stockholders' equity | $ | 1,711,772 | $ | 1,884,387 | |||
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CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||
Fiscal Quarter Ended | Fiscal Year Ended | ||||||||||||||||||
September 24, |
September 30, |
September 24, |
September 30, |
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(unaudited) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
Operating activities: | |||||||||||||||||||
Net income including controlling interest | $ | 63,327 | $ | 79,288 | $ | 282,827 | $ | 310,582 | |||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 9,392 | 10,019 | 34,937 | 43,994 | |||||||||||||||
Stock-based compensation expense | 7,800 | 10,749 | 28,815 | 43,665 | |||||||||||||||
Amortization of premium on investments | 2,734 | 4,713 | 9,118 | 17,088 | |||||||||||||||
Excess tax benefit from exercise of stock options | (7,749 | ) | 6,050 | (24,639 | ) | (6,593 | ) | ||||||||||||
Provision for doubtful accounts | 546 | (56 | ) | 365 | 772 | ||||||||||||||
Deferred taxes | 5,751 | 5,211 | (16,031 | ) | 6,784 | ||||||||||||||
Losses / (gains) on Put Rights | 1,095 | - | 7,601 | - | |||||||||||||||
Losses / (gains) on auction rate certificates | - | - | (7,601 | ) | - | ||||||||||||||
Loss on impairment of long-lived assets | 3,392 | 226 | 12,986 | 226 | |||||||||||||||
Payment on litigation settlement | - | - | (3,000 | ) | (3,000 | ) | |||||||||||||
Other non-cash items affecting net income | (1,660 | ) | 357 | 347 | 532 | ||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable | (6,734 | ) | (22,579 | ) | (31,329 | ) | (8,514 | ) | |||||||||||
Inventories | (11,609 | ) | (2,822 | ) | (15,696 | ) | 2,105 | ||||||||||||
Prepaid expenses and other assets | (721 | ) | (3,587 | ) | 15,009 | (10,305 | ) | ||||||||||||
Accounts payable and accrued liabilities | 7,797 | 10,837 | 31,556 | (16,952 | ) | ||||||||||||||
Income taxes, net | (3,908 | ) | (5,678 | ) | 27,995 | 708 | |||||||||||||
Deferred revenue | (1,443 | ) | 14,400 | (25,725 | ) | 19,800 | |||||||||||||
Other non-current liabilities | (163 | ) | 2,401 | (237 | ) | 2,796 | |||||||||||||
Net cash provided by operating activities | 67,847 | 109,529 | 327,298 | 403,688 | |||||||||||||||
Investing activities: | |||||||||||||||||||
Purchases of available-for-sale securities | (89,880 | ) | (164,443 | ) | (646,052 | ) | (619,238 | ) | |||||||||||
Proceeds from sale of available-for-sale and trading securities | 123,586 | 84,062 | 643,443 | 429,681 | |||||||||||||||
Purchases of property, plant and equipment | (12,429 | ) | (17,028 | ) | (37,482 | ) | (47,362 | ) | |||||||||||
Acquisitions, net of cash acquired | (5,601 | ) | - | (5,601 | ) | (3,350 | ) | ||||||||||||
Purchases of intangible assets | - | - | (825 | ) | - | ||||||||||||||
Proceeds from sale of property, plant and equipment | 1,989 | 490 | 2,160 | 3,567 | |||||||||||||||
Net cash provided by/(used in) investing activities | 17,665 | (96,919 | ) | (44,357 | ) | (236,702 | ) | ||||||||||||
Financing activities: | |||||||||||||||||||
Payments on debt | (6,488 | ) | - | (7,680 | ) | - | |||||||||||||
Proceeds from issuance of Class A common stock (Employee Stock Purchase Plan) | - | 13 | 4,060 | 5,442 | |||||||||||||||
Proceeds from exercise of stock options | 2,621 | 386 | 35,569 | 17,877 | |||||||||||||||
Repurchase of common stock | (63,714 | ) | (49,910 | ) | (241,362 | ) | (192,410 | ) | |||||||||||
Excess tax benefit from exercise of stock options | 7,749 | (6,050 | ) | 24,639 | 6,593 | ||||||||||||||
Net cash used in financing activities | (59,832 | ) | (55,561 | ) | (184,774 | ) | (162,498 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | 1,083 | (141 | ) | (3,984 | ) | 1,163 | |||||||||||||
Net increase in cash and cash equivalents | 26,763 | (43,092 | ) | 94,183 | 5,651 | ||||||||||||||
Cash and cash equivalents at beginning of period | 519,098 | 594,604 | 451,678 | 545,861 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 545,861 | $ | 551,512 | $ | 545,861 | $ | 551,512 | |||||||||||
GAAP to Non-GAAP Reconciliations | ||||||||
(In millions, except per share data) | ||||||||
The following tables show the Company's fourth quarter of fiscal 2011 and fiscal 2011 year-to-date GAAP financial measures reconciled to non-GAAP financial measures included in this release: | ||||||||
Net income: | Fiscal Quarter Ended | Fiscal Year Ended | ||||||
September 30, |
September 30, |
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GAAP net income | $ | 79.1 | $ | 309.3 | ||||
Stock-based compensation | 10.7 | 43.7 | ||||||
Amortization of acquired intangibles | 2.7 | 15.2 | ||||||
Restructuring charges, net | 2.7 | 3.4 | ||||||
Income tax adjustments | (5.3 | ) | (31.7 | ) | ||||
Non-GAAP net income | 89.9 | 339.9 | ||||||
Diluted earnings per share: | Fiscal Quarter Ended | Fiscal Year Ended | ||||||
September 30, |
September 30, |
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GAAP diluted earnings per share | $ | 0.71 | $ | 2.75 | ||||
Stock-based compensation | 0.10 | 0.39 | ||||||
Amortization of acquired intangibles | 0.02 | 0.13 | ||||||
Restructuring charges, net | 0.03 | 0.03 | ||||||
Income tax adjustments | (0.05 | ) | (0.28 | ) | ||||
Non-GAAP diluted earnings per share | $ | 0.81 | $ | 3.02 | ||||
Shares used in computing diluted earnings per share | 111 | 113 | ||||||
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 | ||||
Operating expense run-rate: | ||||||||
Q4 2011 Exit Run-Rate | ||||||||
GAAP operating expense run-rate | $ | 115 | ||||||
Stock-based compensation | (12 | ) | ||||||
Amortization of acquired intangibles | (1 | ) | ||||||
Restructuring charges, net | (1 | ) | ||||||
Non-GAAP operating expense run-rate | $ | 101 | ||||||
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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