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Dolby Laboratories Reports FY 2010 Fourth Quarter and Year-End Financial Results
For the fourth quarter,
Fourth quarter GAAP net income was
For the fiscal year,
Fiscal year GAAP net income was
"I am pleased with our fourth quarter and fiscal year results," said
Guidance
For fiscal 2011,
These targets lead to a fiscal 2011 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 1-888-452-4007. International callers can access the conference call at 1-719-325-2269.
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
About
DOLBY LABORATORIES, INC. | |||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||
Fiscal Quarter Ended | Fiscal Year-to-Date Ended | ||||||||||||||||||||||||||
September 25, |
September 24, |
September 25, |
September 24, |
||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||||||
Licensing | $ | 138,621 | $ | 178,429 | $ | 594,697 | $ | 710,474 | |||||||||||||||||||
Products | 20,223 | 40,255 | 95,967 | 180,402 | |||||||||||||||||||||||
Services | 5,033 | 9,123 | 28,839 | 31,837 | |||||||||||||||||||||||
Total revenue | 163,877 | 227,807 | 719,503 | 922,713 | |||||||||||||||||||||||
Cost of revenue: | |||||||||||||||||||||||||||
Cost of licensing | 3,580 | 4,283 | 14,803 | 17,565 | |||||||||||||||||||||||
Cost of products (1) | 10,444 | 18,653 | 57,220 | 90,695 | |||||||||||||||||||||||
Cost of services (1) | 3,240 | 3,407 | 12,786 | 13,961 | |||||||||||||||||||||||
Gain from amended patent licensing agreement | - | - | (20,041 | ) | - | ||||||||||||||||||||||
Impairment of products provided under operating leases | - | - | - | 9,594 | |||||||||||||||||||||||
Total cost of revenue | 17,264 | 26,343 | 64,768 | 131,815 | |||||||||||||||||||||||
Gross margin | 146,613 | 201,464 | 654,735 | 790,898 | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||
Research and development (1) | 21,712 | 29,417 | 81,543 | 104,978 | |||||||||||||||||||||||
Sales and marketing (1) | 29,875 | 36,525 | 98,838 | 130,160 | |||||||||||||||||||||||
General and administrative (1) | 28,929 | 32,676 | 105,841 | 119,353 | |||||||||||||||||||||||
Restructuring charges, net | 835 | 5,655 | 4,847 | 7,026 | |||||||||||||||||||||||
Total operating expenses | 81,351 | 104,273 | 291,069 | 361,517 | |||||||||||||||||||||||
Operating income | 65,262 | 97,191 | 363,666 | 429,381 | |||||||||||||||||||||||
Other income, net | 1,959 | 1,431 | 7,753 | 7,631 | |||||||||||||||||||||||
Income before provision for income taxes | 67,221 | 98,622 | 371,419 | 437,012 | |||||||||||||||||||||||
Provision for income taxes | (22,518 | ) | (35,295 | ) | (127,073 | ) | (154,185 | ) | |||||||||||||||||||
Net income including controlling interest | 44,703 | 63,327 | 244,346 | 282,827 | |||||||||||||||||||||||
Less: net (income) / loss attributable to controlling interest | (404 | ) | 1,684 | (1,355 | ) | 620 | |||||||||||||||||||||
Net income attributable to Dolby Laboratories, Inc. | $ | 44,299 | $ | 65,011 | $ | 242,991 | $ | 283,447 | |||||||||||||||||||
Basic earnings per share | $ | 0.39 | $ | 0.58 | $ | 2.15 | $ | 2.50 | |||||||||||||||||||
Diluted earnings per share | $ | 0.38 | $ | 0.57 | $ | 2.11 | $ | 2.46 | |||||||||||||||||||
Weighted-average shares outstanding (basic) | 113,684 | 112,486 | 113,101 | 113,452 | |||||||||||||||||||||||
Weighted-average shares outstanding (diluted) | 115,845 | 114,276 | 115,367 | 115,388 | |||||||||||||||||||||||
(1) Stock-based compensation included above was classified as follows: | |||||||||||||||||||||||||||
Cost of products | $ | 93 | $ | 122 | $ | 564 | $ | 427 | |||||||||||||||||||
Cost of services | 30 | 27 | 115 | 126 | |||||||||||||||||||||||
Research and development | 1,403 | 1,922 | 5,191 | 6,535 | |||||||||||||||||||||||
Sales and marketing | 1,924 | 2,321 | 6,670 | 8,843 | |||||||||||||||||||||||
General and administrative | 2,997 | 3,408 | 9,882 | 12,884 |
DOLBY LABORATORIES, INC. | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
September 25, 2009 | September 24, 2010 | |||||||||
(unaudited) | ||||||||||
(in thousands) | ||||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 451,678 | $ | 545,861 | ||||||
Short-term investments | 283,808 | 302,269 | ||||||||
Accounts receivable, net | 22,981 | 54,257 | ||||||||
Inventories | 12,975 | 28,338 | ||||||||
Deferred taxes | 83,438 | 102,758 | ||||||||
Prepaid expenses and other current assets | 45,958 | 26,930 | ||||||||
Total current assets | 900,838 | 1,060,413 | ||||||||
Long-term investments | 205,938 | 190,837 | ||||||||
Property, plant and equipment, net | 92,178 | 94,097 | ||||||||
Intangible assets, net | 82,035 | 67,019 | ||||||||
Goodwill | 261,121 | 264,580 | ||||||||
Deferred taxes | 23,755 | 19,948 | ||||||||
Other non-current assets | 15,450 | 14,878 | ||||||||
Total assets | $ | 1,581,315 | $ | 1,711,772 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
Accounts payable and accrued liabilities | $ | 113,822 | $ | 148,214 | ||||||
Income taxes payable | 3,934 | 7,895 | ||||||||
Current portion of long-term debt | 1,624 | - | ||||||||
Deferred revenue | 37,204 | 9,647 | ||||||||
Total current liabilities | 156,584 | 165,756 | ||||||||
Long-term debt, net of current portion | 5,825 | - | ||||||||
Long-term deferred revenue | 10,759 | 12,775 | ||||||||
Deferred taxes | 13,573 | 11,547 | ||||||||
Other non-current liabilities | 31,469 | 27,015 | ||||||||
Total liabilities | 218,210 | 217,093 | ||||||||
Stockholders' equity: | ||||||||||
Class A common stock | 53 | 53 | ||||||||
Class B common stock | 60 | 59 | ||||||||
Additional paid-in capital | 478,979 | 329,902 | ||||||||
Retained earnings | 852,475 | 1,135,922 | ||||||||
Accumulated other comprehensive income | 9,541 | 7,801 | ||||||||
Total stockholders' equity - Dolby Laboratories, Inc. | 1,341,108 | 1,473,737 | ||||||||
Controlling interest | 21,997 | 20,942 | ||||||||
Total stockholders' equity | 1,363,105 | 1,494,679 | ||||||||
Total liabilities and stockholders' equity | $ | 1,581,315 | $ | 1,711,772 |
DOLBY LABORATORIES, INC. | |||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||
Fiscal Quarter Ended | Fiscal Year-to-Date Ended | ||||||||||||||||||
September 25, |
September 24, |
September 25, |
September 24, |
||||||||||||||||
(unaudited) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||
Operating activities: | |||||||||||||||||||
Net income | $ 44,703 | $ 63,327 | $ 244,346 | $ 282,827 | |||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 7,231 | 9,392 | 28,732 | 34,937 | |||||||||||||||
Stock-based compensation expense | 6,207 | 7,193 | 21,758 | 27,694 | |||||||||||||||
Amortization of premium on investments | 1,647 | 2,734 | 5,589 | 9,118 | |||||||||||||||
Excess tax benefit from exercise of stock options | (2,279) | (7,749) | (5,827) | (24,639) | |||||||||||||||
Provision for doubtful accounts | 244 | 546 | 1,392 | 365 | |||||||||||||||
Deferred taxes | (14,595) | 5,751 | 5,237 | (16,031) | |||||||||||||||
Losses / (gains) on Put Rights | (56) | 1,095 | (9,508) | 7,601 | |||||||||||||||
Losses / (gains) on auction rate certificates | 15 | - | 10,869 | (7,601) | |||||||||||||||
Loss on impairment of long-lived assets | - | 3,392 | - | 12,986 | |||||||||||||||
Gain from amended patent licensing agreement | - | - | (20,041) | - | |||||||||||||||
Cash distributions to controlling interest | (136) | (137) | (257) | (263) | |||||||||||||||
Other non-cash items affecting net income | 492 | (1,523) | 2,408 | 610 | |||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable | 26,491 | (6,734) | 1,797 | (31,329) | |||||||||||||||
Inventories | (3,783) | (11,609) | (3,638) | (15,696) | |||||||||||||||
Prepaid expenses and other assets | (3,310) | (721) | (147) | 15,009 | |||||||||||||||
Accounts payable and accrued liabilities | 2,882 | 8,404 | (21,362) | 32,677 | |||||||||||||||
Income taxes, net | 8,354 | (3,908) | 8,602 | 27,995 | |||||||||||||||
Deferred revenue | 2,700 | (1,443) | 7,488 | (25,725) | |||||||||||||||
Other non-current liabilities | 1,154 | (163) | (1,213) | (237) | |||||||||||||||
Payment on litigation settlement | - | - | (3,000) | (3,000) | |||||||||||||||
Net cash provided by operating activities | 77,961 | 67,847 | 273,225 | 327,298 | |||||||||||||||
Investing activities: | |||||||||||||||||||
Purchases of available-for-sale securities | (68,500) | (89,880) | (373,223) | (646,052) | |||||||||||||||
Proceeds from sale of available-for-sale and trading securities | 78,923 | 123,586 | 176,908 | 643,443 | |||||||||||||||
Purchases of property, plant and equipment | (4,758) | (12,429) | (13,994) | (37,482) | |||||||||||||||
Purchases of intangible assets | (1,250) | - | (9,571) | (825) | |||||||||||||||
Acquisitions, net of cash acquired | - | (5,601) | (16,621) | (5,601) | |||||||||||||||
Proceeds from sale of property, plant and equipment | - | 1,989 | - | 2,160 | |||||||||||||||
Net cash provided by / (used in) investing activities | 4,415 | 17,665 | (236,501) | (44,357) | |||||||||||||||
Financing activities: | |||||||||||||||||||
Payments on debt | (401) | (6,488) | (1,522) | (7,680) | |||||||||||||||
Proceeds from exercise of stock options | 4,306 | 2,621 | 13,716 | 35,569 | |||||||||||||||
Proceeds from issuance of Class A common stock (ESPP) | 37 | 0 | 3,502 | 4,060 | |||||||||||||||
Repurchase of common stock | - | (63,714) | - | (241,362) | |||||||||||||||
Excess tax benefit from exercise of stock options | 2,279 | 7,749 | 5,827 | 24,639 | |||||||||||||||
Net cash provided by / (used in) financing activities | 6,221 | (59,832) | 21,523 | (184,774) | |||||||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | (295) | 1,083 | (1,330) | (3,984) | |||||||||||||||
Net increase in cash and cash equivalents | 88,302 | 26,763 | 56,917 | 94,183 | |||||||||||||||
Cash and cash equivalents at beginning of period | 363,376 | 519,098 | 394,761 | 451,678 | |||||||||||||||
Cash and cash equivalents at end of period | $ 451,678 | $ 545,861 | $ 451,678 | $ 545,861 |
GAAP to Non-GAAP Reconciliations | |||||||||||||
(In millions, except per share data) | |||||||||||||
The following tables show the Company's fourth quarter of fiscal 2010 and fiscal 2010 year-to-date GAAP financial measures reconcilied to non-GAAP financial measures included in this release: | |||||||||||||
Net income: | Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||
September 24,
2010 |
September 24,
2010 |
||||||||||||
GAAP net income | $ | 65 | $ | 283 | |||||||||
Stock-based compensation | 8 | 29 | |||||||||||
Amortization of acquired intangibles | 3 | 13 | |||||||||||
Restructuring charges, net | 6 | 7 | |||||||||||
Income tax adjustments | (5 | ) | (17 | ) | |||||||||
Controlling interest restructuring | (2 | ) | (2 | ) | |||||||||
Non-GAAP net income | $ | 75 | $ | 313 | |||||||||
Diluted earnings per share: | Fiscal Quarter Ended | Fiscal Year Ended | |||||||||||
September 24,
2010 |
September 24,
2010 |
||||||||||||
GAAP diluted earnings per share | $ | 0.57 | $ | 2.46 | |||||||||
Stock-based compensation | 0.07 | 0.25 | |||||||||||
Amortization of acquired intangibles | 0.03 | 0.11 | |||||||||||
Restructuring charges, net | 0.05 | 0.06 | |||||||||||
Income tax adjustments | (0.04 | ) | (0.15 | ) | |||||||||
Controlling interest restructuring | (0.02 | ) | (0.01 | ) | |||||||||
Non-GAAP diluted earnings per share | $ | 0.66 | $ | 2.72 | |||||||||
Shares used in computing diluted earnings per share | 114 | 115 | |||||||||||
The following tables show the Company's fiscal year 2011 GAAP financial targets reconciled to non-GAAP financial targets included in this release: | |||||||||||||
Gross margin: | Fiscal Year | ||||||||||||
Net income attributable to Dolby Laboratories, Inc. | 2011 | ||||||||||||
GAAP gross margin | 88 | % | |||||||||||
Stock-based compensation | 0 | % | |||||||||||
Amortization of acquired intangibles | 1 | % | |||||||||||
Non-GAAP gross margin | 89 | % | |||||||||||
Operating expenses: | Fiscal Year 2011 | ||||||||||||
Low | High | ||||||||||||
GAAP operating expenses | $ | 411 | $ | 423 | |||||||||
Stock-based compensation | (44 | ) | (46 | ) | |||||||||
Amortization of acquired intangibles | (5 | ) | (5 | ) | |||||||||
Restructuring charges, net | (2 | ) | (2 | ) | |||||||||
Non-GAAP operating expenses | $ | 360 | $ | 370 | |||||||||
Diluted earnings per share: | Fiscal Year 2011 | ||||||||||||
Low | High | ||||||||||||
GAAP diluted earnings per share | $ | 2.52 | $ | 2.66 | |||||||||
Stock-based compensation | 0.40 | 0.42 | |||||||||||
Amortization of acquired intangibles | 0.11 | 0.11 | |||||||||||
Restructuring charges, net | 0.02 | 0.02 | |||||||||||
Income tax adjustments | (0.18 | ) | (0.18 | ) | |||||||||
Non-GAAP diluted earnings per share | $ | 2.87 | $ | 3.03 | |||||||||
Shares used in computing diluted earnings per share | 114 | 114 |
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