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Dolby Laboratories Reports Fourth Quarter and Fiscal 2016 Financial Results
Fourth quarter GAAP net income was
Fiscal 2016 GAAP net income was
"Q4 wrapped up an important year for Dolby," said
Dividend
Today, Dolby announced an increase in our quarterly cash dividend to
Financial Outlook
Q1 2017
Dolby estimates that total revenue for the first quarter (Q1) of fiscal
2017 will range from
Dolby anticipates that operating expenses will be between
Dolby estimates that diluted earnings per share will be between
Dolby estimates that its fiscal Q1 2017 effective tax rate will be approximately 25 percent on both a GAAP and non-GAAP basis.
Fiscal 2017
Dolby anticipates that total revenue will range from
Dolby anticipates that operating expenses will range from
Conference Call Information
Members of Dolby management will lead a conference call open to all
interested parties to discuss Q4 and fiscal 2016 financial results for
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 certain non-GAAP financial measures. 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. In the fourth
quarter of fiscal 2015, our non-GAAP results exclude a one-time gain on
the sale of real estate. 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
Forward-Looking Statements
Certain statements in this press release, including, but not limited to,
statements relating to Dolby's expected financial results for Q1 2017
and fiscal 2017, our ability to advance our long-term objectives, and
future quarterly dividend payments 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, cinema, gaming,
mobile, communications, and automotive 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® 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, including
back payments; timing of revenue recognition under licensing agreements
and other contractual arrangements; 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; competitive risks; risks associated with conducting
business in
About
Dolby and the double-D symbol are registered trademarks of
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(in thousands, except per share amounts) |
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Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||||||||
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2016 | 2015 | 2016 | 2015 | |||||||||||||||||||
Revenue: | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||
Licensing | $ | 203,541 | $ | 203,325 | $ | 917,032 | $ | 868,111 | ||||||||||||||
Products | 25,033 | 25,060 | 90,543 | 83,904 | ||||||||||||||||||
Services | 4,423 | 4,363 |
18,163 |
18,623 | ||||||||||||||||||
Total revenue | 232,997 | 232,748 | 1,025,738 | 970,638 | ||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||||
Cost of licensing | 8,482 | 2,264 | 28,333 | 10,879 | ||||||||||||||||||
Cost of products | 17,739 | 19,642 | 64,853 | 70,490 | ||||||||||||||||||
Cost of services | 4,001 | 3,471 | 15,796 | 13,447 | ||||||||||||||||||
Total cost of revenue | 30,222 | 25,377 | 108,982 | 94,816 | ||||||||||||||||||
Gross margin | 202,775 | 207,371 | 916,756 | 875,822 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Research and development | 59,214 | 50,621 | 219,607 | 201,324 | ||||||||||||||||||
Sales and marketing | 74,764 | 74,434 | 295,267 | 279,174 | ||||||||||||||||||
General and administrative | 39,724 | 46,220 | 168,854 | 182,176 | ||||||||||||||||||
Restructuring charges/(credits) | (12 | ) | (41 | ) | 1,233 | (80 | ) | |||||||||||||||
Total operating expenses | 173,690 | 171,234 | 684,961 | 662,594 | ||||||||||||||||||
Operating income | 29,085 | 36,137 | 231,795 | 213,228 | ||||||||||||||||||
Other income/expense: | ||||||||||||||||||||||
Interest income | 1,673 | 1,100 | 5,684 | 4,544 | ||||||||||||||||||
Interest expense | (37 | ) | (68 | ) | (125 | ) | (183 | ) | ||||||||||||||
Other income/(expense), net | 92 | 27,034 | (1,450 | ) | 28,193 | |||||||||||||||||
Total other income | 1,728 | 28,066 | 4,109 | 32,554 | ||||||||||||||||||
Income before income taxes | 30,813 | 64,203 | 235,904 | 245,782 | ||||||||||||||||||
Provision for income taxes | (6,734 | ) | (17,288 | ) | (49,502 | ) | (62,542 | ) | ||||||||||||||
Net income including controlling interest | 24,079 | 46,915 | 186,402 | 183,240 | ||||||||||||||||||
Less: net (income) attributable to controlling interest | (146 | ) | (362 | ) | (542 | ) | (1,850 | ) | ||||||||||||||
Net income attributable to |
$ | 23,933 | $ | 46,553 | $ | 185,860 | $ | 181,390 | ||||||||||||||
Net Income Per Share: | ||||||||||||||||||||||
Basic | $ | 0.24 | $ | 0.46 | $ | 1.85 | $ | 1.77 | ||||||||||||||
Diluted | $ | 0.23 | $ | 0.45 | $ | 1.81 | $ | 1.75 | ||||||||||||||
Weighted-Average Shares Outstanding: | ||||||||||||||||||||||
Basic | 101,145 | 101,935 | 100,717 | 102,354 | ||||||||||||||||||
Diluted | 103,766 | 103,059 | 102,424 | 103,862 | ||||||||||||||||||
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CONSOLIDATED BALANCE SHEETS |
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(in thousands) |
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2016 | 2015 | ||||||||||
ASSETS | (unaudited) | ||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 516,112 | $ | 531,926 | |||||||
Restricted cash | 3,645 | 2,936 | |||||||||
Short-term investments | 121,629 | 138,901 | |||||||||
Accounts receivable, net | 75,688 | 101,563 | |||||||||
Inventories | 16,354 | 13,872 | |||||||||
Prepaid expenses and other current assets | 26,302 | 32,031 | |||||||||
Total current assets | 759,730 | 821,229 | |||||||||
Long-term investments | 393,904 | 321,015 | |||||||||
Property, plant and equipment, net | 443,656 | 403,091 | |||||||||
Intangible assets, net | 215,342 | 127,507 | |||||||||
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309,616 | 307,708 | |||||||||
Deferred taxes | 166,790 | 143,279 | |||||||||
Other non-current assets | 21,068 | 9,464 | |||||||||
Total assets | $ | 2,310,106 | $ | 2,133,293 | |||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 17,544 | $ | 20,710 | |||||||
Accrued liabilities | 169,055 | 169,307 | |||||||||
Income taxes payable | 2,304 | 754 | |||||||||
Deferred revenue | 24,180 | 18,910 | |||||||||
Total current liabilities | 213,083 | 209,681 | |||||||||
Long-term deferred revenue | 35,366 | 30,581 | |||||||||
Other non-current liabilities | 82,922 | 77,024 | |||||||||
Total liabilities | 331,371 | 317,286 | |||||||||
Stockholders' equity: | |||||||||||
Class A common stock | 57 | 51 | |||||||||
Class B common stock | 44 | 51 | |||||||||
Additional paid-in capital | 42,032 | 17,571 | |||||||||
Retained earnings | 1,938,320 | 1,800,857 | |||||||||
Accumulated other comprehensive (loss) | (10,197 | ) | (11,462 | ) | |||||||
Total stockholders' equity - |
1,970,256 | 1,807,068 | |||||||||
Controlling interest | 8,479 | 8,939 | |||||||||
Total stockholders' equity | 1,978,735 | 1,816,007 | |||||||||
Total liabilities and stockholders' equity | $ | 2,310,106 | $ | 2,133,293 | |||||||
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CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(in thousands) |
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Fiscal Year Ended | |||||||||||
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2016 | 2015 | ||||||||||
Operating activities: |
(unaudited) | ||||||||||
Net income including controlling interest | $ | 186,402 | $ | 183,240 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 85,152 | 69,133 | |||||||||
Stock-based compensation | 66,985 | 67,069 | |||||||||
Amortization of premium on investments | 3,824 | 9,162 | |||||||||
Excess tax benefit from exercise of stock options | (3,225 | ) | (2,544 | ) | |||||||
Provision for doubtful accounts | 1,017 | 33 | |||||||||
Deferred income taxes | (22,798 | ) | (14,484 | ) | |||||||
Gain on sale of ownership interest in subsidiary (pre-tax) | — | (26,221 | ) | ||||||||
Other non-cash items affecting net income | 1,779 | 5,125 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 24,886 | (7,008 | ) | ||||||||
Inventories | (2,949 | ) | 5,835 | ||||||||
Prepaid expenses and other assets | (15,217 | ) | (3,595 | ) | |||||||
Accounts payable and other liabilities |
2,834 |
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(7,384 | ) | |||||||
Income taxes, net | 17,265 | 21,767 | |||||||||
Deferred revenue | 10,288 | 8,981 | |||||||||
Other non-current liabilities | 596 | 268 | |||||||||
Net cash provided by operating activities |
356,839 |
309,377 | |||||||||
Investing activities: | |||||||||||
Purchase of investments | (426,118 | ) | (392,936 | ) | |||||||
Proceeds from sales of investment securities | 262,125 | 305,225 | |||||||||
Proceeds from maturities of investment securities | 103,987 | 146,152 | |||||||||
Purchases of PP&E |
(100,762 |
) | (157,526 | ) | |||||||
Payments for business acquisitions, net of cash acquired | — | (93,516 | ) | ||||||||
Purchase of intangible assets | (121,020 | ) | (37,416 | ) | |||||||
Proceeds from sale of ownership interest in subsidiary (net) | — | 27,216 | |||||||||
Change in restricted cash | (709 | ) | (794 | ) | |||||||
Net cash used in investing activities |
(282,497 |
) | (203,595 | ) | |||||||
Financing activities: | |||||||||||
Proceeds from issuance of common stock | 71,111 | 28,627 | |||||||||
Repurchase of common stock | (100,854 | ) | (107,349 | ) | |||||||
Payment of cash dividend | (48,397 | ) | (41,018 | ) | |||||||
Distribution to controlling interest | (214 | ) | (5,615 | ) | |||||||
Excess tax benefit from exercise of stock options | 3,225 | 2,544 | |||||||||
Shares repurchased for tax withholdings on vesting of restricted stock | (13,632 | ) | (15,708 | ) | |||||||
Net cash used in financing activities | (88,761 | ) | (138,519 | ) | |||||||
Effect of foreign exchange rate changes on cash and cash equivalents | (1,395 | ) | (3,809 | ) | |||||||
Net (decrease) in cash and cash equivalents |
(15,814 | ) | (36,546 | ) | |||||||
Cash and cash equivalents at beginning of period | 531,926 | 568,472 | |||||||||
Cash and cash equivalents at end of period | $ | 516,112 | $ | 531,926 | |||||||
GAAP to Non-GAAP Reconciliations | |||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||
The following tables present Dolby's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the fourth quarter of fiscal 2016 and 2015 and fiscal 2016 and 2015: | |||||||||||||||||||||
Net income: | Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||||||
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2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
GAAP net income | $ | 23.9 | $ | 46.6 | $ | 185.9 | $ | 181.4 | |||||||||||||
Stock-based compensation | 15.5 | 16.3 | 67.0 | 67.1 | |||||||||||||||||
RSU dividend equivalent | 0.2 | 0.5 | 1.2 | 2.4 | |||||||||||||||||
Amortization of acquired intangibles | 3.7 | 4.0 | 15.4 | 17.0 | |||||||||||||||||
Restructuring charges, net | — | — | 1.2 | — | |||||||||||||||||
Other non-operating income adjustments | — | (26.2 | ) | — | (26.2 | ) | |||||||||||||||
Income tax adjustments | (4.7 | ) | 3.2 | (21.7 | ) | (12.4 | ) | ||||||||||||||
Non-GAAP net income | $ | 38.6 | $ | 44.4 | $ | 249.0 | $ | 229.3 | |||||||||||||
Diluted earnings per share: | Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||||||||||
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2016 | 2015 | 2016 | 2015 | ||||||||||||||||||
GAAP diluted earnings per share | $ | 0.23 | $ | 0.45 | $ | 1.81 | $ | 1.75 | |||||||||||||
Stock-based compensation | 0.15 | 0.16 | 0.66 | 0.65 | |||||||||||||||||
RSU dividend equivalent | — | — | 0.01 | 0.02 | |||||||||||||||||
Amortization of acquired intangibles | 0.04 | 0.04 | 0.15 | 0.16 | |||||||||||||||||
Restructuring charges, net | — | — | 0.01 | — | |||||||||||||||||
Other non-operating income adjustments | — | (0.25 | ) | — | (0.25 | ) | |||||||||||||||
Income tax adjustments | (0.05 | ) | 0.03 | (0.21 | ) | (0.12 | ) | ||||||||||||||
Non-GAAP diluted earnings per share | $ | 0.37 | $ | 0.43 | $ | 2.43 | $ | 2.21 | |||||||||||||
Shares used in computing diluted earnings per share |
104 | 103 | 102 | 104 | |||||||||||||||||
The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial amounts for the first quarter of fiscal 2017 and fiscal 2017 included in this release: | |||||||||||||||||||||
Gross margin: |
Q1 2017 |
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GAAP gross margin (low - high end of range) | 88% - 89% | ||||||||||||||||||||
Stock-based compensation | 0.1 | % | |||||||||||||||||||
Amortization of acquired intangibles | 0.9 | % | |||||||||||||||||||
Non-GAAP gross margin (low - high end of range) | 89% - 90% | ||||||||||||||||||||
Operating expenses: | Q1 2017 | Fiscal 2017 | |||||||||||||||||||
GAAP operating expenses (low - high end of range) |
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Stock-based compensation | (17.5 | ) | (70.0 | ) | |||||||||||||||||
Amortization of acquired intangibles | (1.5 | ) | (5.0 | ) | |||||||||||||||||
Non-GAAP operating expenses (low - high end of range) |
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Diluted earnings per share: | Q1 2017 | ||||||||||||||||||||
Low | High | ||||||||||||||||||||
GAAP diluted earnings per share | $ | 0.34 | $ | 0.40 | |||||||||||||||||
Stock-based compensation | 0.17 | 0.17 | |||||||||||||||||||
Amortization of acquired intangibles | 0.03 | 0.03 | |||||||||||||||||||
Income tax adjustments | (0.05 | ) | (0.05 | ) | |||||||||||||||||
Non-GAAP diluted earnings per share | $ | 0.49 | $ | 0.55 | |||||||||||||||||
Shares used in computing diluted earnings per share |
103 | 103 |
View source version on businesswire.com: http://www.businesswire.com/news/home/20161026006669/en/
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