All Press Releases
Dolby Laboratories Reports Second Quarter Fiscal 2015 Financial Results
Second quarter GAAP net income was
"We had another solid quarter driven by growth in our broadcast
business," said
Dividend
Dolby today announced a cash dividend of
Financial Outlook
Q3 2015
Dolby estimates that total revenue will range from
Dolby anticipates that operating expenses will be between
Dolby estimates diluted earnings per share to be between
Dolby estimates that its fiscal Q3 2015 effective tax rate will be approximately 26 percent on both a GAAP and non-GAAP basis.
Fiscal Year 2015
Dolby anticipates that total revenue will range from
Dolby anticipates that operating expenses will be between
Conference Call Information
Members of Dolby management will lead a conference call open to all
interested parties to discuss the financial results and outlook 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,
expenses 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. 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 Q3 2015
and fiscal 2015 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, gaming, mobile, and
automobile 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® 8 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
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) |
|||||||||||||||||
Fiscal Quarter Ended | Fiscal Year-To-Date Ended | ||||||||||||||||
2015 |
2014 |
2015 |
2014 |
||||||||||||||
Revenue: | |||||||||||||||||
Licensing | $ | 243,333 | $ | 258,616 | $ | 459,931 | $ | 464,276 | |||||||||
Products | 22,985 | 14,563 | 36,248 | 32,667 | |||||||||||||
Services | 5,632 | 5,413 | 10,009 | 12,926 | |||||||||||||
Total revenue | 271,950 | 278,592 | 506,188 | 509,869 | |||||||||||||
Cost of revenue: | |||||||||||||||||
Cost of licensing | 3,787 | 3,742 | 7,268 | 7,743 | |||||||||||||
Cost of products | 18,237 | 10,293 | 30,821 | 24,081 | |||||||||||||
Cost of services | 3,125 | 3,470 | 6,470 | 7,063 | |||||||||||||
Total cost of revenue | 25,149 | 17,505 | 44,559 | 38,887 | |||||||||||||
Gross margin | 246,801 | 261,087 | 461,629 | 470,982 | |||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 56,601 | 44,798 | 105,195 | 89,261 | |||||||||||||
Sales and marketing | 65,940 | 64,828 | 133,958 | 125,207 | |||||||||||||
General and administrative | 45,653 | 46,457 | 90,369 | 88,365 | |||||||||||||
Restructuring charges/(credits) | — | 86 | (39 | ) | 3,301 | ||||||||||||
Total operating expenses | 168,194 | 156,169 | 329,483 | 306,134 | |||||||||||||
Operating income | 78,607 | 104,918 | 132,146 | 164,848 | |||||||||||||
Other income/expense: | |||||||||||||||||
Interest income | 1,091 | 920 | 1,991 | 1,574 | |||||||||||||
Interest expense | (31 | ) | (93 | ) | (46 | ) | (205 | ) | |||||||||
Other income/(expense), net | 218 | (2,823 | ) | 110 | (2,594 | ) | |||||||||||
Total other income/expense | 1,278 | (1,996 | ) | 2,055 | (1,225 | ) | |||||||||||
Income before income taxes | 79,885 | 102,922 | 134,201 | 163,623 | |||||||||||||
Provision for income taxes | (21,353 | ) | (26,373 | ) | (33,732 | ) | (41,828 | ) | |||||||||
Net income including controlling interest | 58,532 | 76,549 | 100,469 | 121,795 | |||||||||||||
Less: net (income) attributable to controlling interest | (558 | ) | (681 | ) | (1,138 | ) | (1,412 | ) | |||||||||
Net income attributable to |
$ | 57,974 | $ | 75,868 | $ | 99,331 | $ | 120,383 | |||||||||
Net Income Per Share: | |||||||||||||||||
Basic | $ | 0.57 | $ | 0.74 | $ | 0.97 | $ | 1.18 | |||||||||
Diluted | $ | 0.56 | $ | 0.73 | $ | 0.95 | $ | 1.16 | |||||||||
Weighted-Average Shares Outstanding: | |||||||||||||||||
Basic | 102,509 | 102,291 | 102,406 | 102,021 | |||||||||||||
Diluted | 103,904 | 103,934 | 104,097 | 103,460 | |||||||||||||
Related party rent expense: | |||||||||||||||||
Included in operating expenses | $ | 755 | $ | 346 | $ | 1,543 | $ | 692 | |||||||||
Included in net income attributable to controlling interest | $ | 1,151 | $ | 1,250 | $ | 2,304 | $ | 2,505 | |||||||||
Cash dividend declared per common share | $ | 0.10 | $ | — | $ | 0.20 | $ | — | |||||||||
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share amounts) |
||||||||
2015 |
2014 |
|||||||
ASSETS | (unaudited) | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 513,994 | $ | 568,472 | ||||
Restricted cash | 2,156 | 2,142 | ||||||
Short-term investments | 188,164 | 231,208 | ||||||
Accounts receivable, net of allowance for doubtful accounts of
|
98,562 | 86,168 | ||||||
Inventories | 23,761 | 8,536 | ||||||
Deferred taxes | 80,858 | 86,445 | ||||||
Prepaid expenses and other current assets | 34,523 | 22,880 | ||||||
Total current assets | 942,018 | 1,005,851 | ||||||
Long-term investments | 330,298 | 296,335 | ||||||
Property, plant and equipment, net | 358,368 | 289,755 | ||||||
Intangible assets, net | 106,369 | 63,700 | ||||||
Goodwill | 312,869 | 277,574 | ||||||
Deferred taxes | 55,340 | 41,746 | ||||||
Other non-current assets | 9,342 | 9,051 | ||||||
Total assets | $ | 2,114,604 | $ | 1,984,012 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 14,130 | $ | 15,898 | ||||
Accrued liabilities | 189,507 | 158,376 | ||||||
Income taxes payable | 1,144 | 2,600 | ||||||
Deferred revenue | 16,371 | 12,496 | ||||||
Total current liabilities | 221,152 | 189,370 | ||||||
Long-term deferred revenue | 29,678 | 19,279 | ||||||
Other non-current liabilities | 64,715 | 43,715 | ||||||
Total liabilities | 315,545 | 252,364 | ||||||
Stockholders' equity: | ||||||||
Class A, |
52 | 51 | ||||||
Class B, |
51 | 52 | ||||||
Additional paid-in capital | 50,662 | 46,415 | ||||||
Retained earnings | 1,739,346 | 1,660,485 | ||||||
Accumulated other comprehensive income | (7,532 | ) | 3,014 | |||||
Total stockholders' equity - |
1,782,579 | 1,710,017 | ||||||
Controlling interest | 16,480 | 21,631 | ||||||
Total stockholders' equity | 1,799,059 | 1,731,648 | ||||||
Total liabilities and stockholders' equity | $ | 2,114,604 | $ | 1,984,012 | ||||
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
||||||||||||||||||
Fiscal Quarter Ended | Fiscal Year-To-Date Ended | |||||||||||||||||
2015 |
2014 |
2015 |
2014 |
|||||||||||||||
Operating activities: | ||||||||||||||||||
Net income including controlling interest | $ | 58,532 | $ | 76,549 | $ | 100,469 | $ | 121,795 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||
Depreciation and amortization | 17,054 | 12,705 | 33,578 | 25,114 | ||||||||||||||
Stock-based compensation | 16,667 | 17,753 | 34,509 | 32,807 | ||||||||||||||
Amortization of premium on investments | 2,420 | 2,328 | 4,811 | 4,594 | ||||||||||||||
Excess tax benefit from exercise of stock options | (151 | ) | (552 | ) | (2,095 | ) | (1,562 | ) | ||||||||||
Provision for doubtful accounts | (111 | ) | 133 | (487 | ) | 507 | ||||||||||||
Deferred income taxes | (1,371 | ) | (4,980 | ) | (7,681 | ) | (6,302 | ) | ||||||||||
Other non-cash items affecting net income | 599 | 2,838 | 1,252 | 2,943 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||
Accounts receivable | 18,985 | (33,334 | ) | (3,457 | ) | (12,186 | ) | |||||||||||
Inventories | 4,394 | (585 | ) | 1,397 | 1,640 | |||||||||||||
Prepaid expenses and other assets | (1,572 | ) | 492 | (6,045 | ) | (1,139 | ) | |||||||||||
Accounts payable and other liabilities |
39,557 |
22,033 |
(7,244 |
) | 5,337 | |||||||||||||
Income taxes, net | 8,372 | 8,591 | 12,064 | 13,386 | ||||||||||||||
Deferred revenue | 1,034 | (1,879 | ) | 5,486 | (7,776 | ) | ||||||||||||
Other non-current liabilities | (381 | ) | 46 | 916 | 262 | |||||||||||||
Net cash provided by operating activities |
164,028 |
102,138 |
167,473 |
179,420 | ||||||||||||||
Investing activities: | ||||||||||||||||||
Purchase of investments |
(84,105 | ) | (76,113 | ) | (194,613 | ) | (178,830 | ) | ||||||||||
Proceeds from sales of investment securities | 56,620 | 35,998 | 120,074 | 63,424 | ||||||||||||||
Proceeds from maturities of investment securities | 37,185 | 34,663 | 79,885 | 81,402 | ||||||||||||||
Purchases of property, plant and equipment |
(46,363 |
) | (8,905 | ) |
(68,024 |
) | (17,872 | ) | ||||||||||
Payments for business acquisitions, net of cash acquired | — |
— |
(93,516 | ) | — | |||||||||||||
Purchase of intangible assets | — | (12,400 | ) | (6,416 | ) | (12,400 | ) | |||||||||||
Proceeds from sale of property, plant and equipment and assets held for sale | — | — | 3 | 42 | ||||||||||||||
Change in restricted cash | (116 | ) | 5 | (14 | ) | (169 | ) | |||||||||||
Net cash used in investing activities |
(36,779 |
) | (26,752 | ) |
(162,621 |
) | (64,403 | ) | ||||||||||
Financing activities: | ||||||||||||||||||
Proceeds from issuance of common stock | 5,117 | 9,337 | 12,629 | 17,464 | ||||||||||||||
Repurchase of common stock | (15,411 | ) | — | (32,364 | ) | (11,660 | ) | |||||||||||
Payment of cash dividend | (10,257 | ) | — | (20,485 | ) | — | ||||||||||||
Distribution to controlling interest | — | — | (5,591 | ) | — | |||||||||||||
Excess tax benefit from the exercise of stock options | 151 | 552 | 2,095 | 1,562 | ||||||||||||||
Shares repurchased for tax withholdings on vesting of restricted stock | (963 | ) | (1,631 | ) | (11,809 | ) | (8,358 | ) | ||||||||||
Net cash provided by/(used in) financing activities | (21,363 | ) | 8,258 | (55,525 | ) | (992 | ) | |||||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | (1,007 | ) | 615 | (3,805 | ) | 477 | ||||||||||||
Net increase/(decrease) in cash and cash equivalents | 104,879 | 84,259 | (54,478 | ) | 114,502 | |||||||||||||
Cash and cash equivalents at beginning of period | 409,115 | 484,640 | 568,472 | 454,397 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 513,994 | $ | 568,899 | $ | 513,994 | $ | 568,899 | ||||||||||
|
||||||||||
GAAP to Non-GAAP Reconciliations |
||||||||||
The following tables present Dolby's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the second quarter of fiscal 2015 and 2014: | ||||||||||
Net income: | Fiscal Quarter Ended | |||||||||
2015 |
2014 |
|||||||||
GAAP net income | $ | 58.0 | $ | 75.9 | ||||||
Stock-based compensation | 16.6 | 17.7 | ||||||||
RSU dividend equivalent | 0.6 | 0.9 | ||||||||
Amortization of acquired intangibles | 4.9 | 2.8 | ||||||||
Restructuring charges, net | — | 0.1 | ||||||||
Income tax adjustments | (5.2 | ) | (5.7 | ) | ||||||
Non-GAAP net income | $ | 74.9 | $ | 91.7 | ||||||
Diluted earnings per share: | Fiscal Quarter Ended | |||||||||
2015 |
2014 |
|||||||||
GAAP diluted earnings per share | $ | 0.56 | $ | 0.73 | ||||||
Stock-based compensation | 0.16 | 0.17 | ||||||||
RSU dividend equivalent | 0.01 | 0.01 | ||||||||
Amortization of acquired intangibles | 0.05 | 0.03 | ||||||||
Income tax adjustments | (0.06 | ) | (0.06 | ) | ||||||
Non-GAAP diluted earnings per share | $ | 0.72 | $ | 0.88 | ||||||
Shares used in computing diluted earnings per share (in millions) | 104 | 104 | ||||||||
The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial amounts for the third quarter of fiscal 2015 and fiscal year 2015 included in this release: | ||||||||||
Gross margin: | Q3 2015 | |||||||||
GAAP gross margin (low - high end of range) |
89 - 90 |
% |
|
|||||||
Stock-based compensation | 0.1 | % | ||||||||
Amortization of acquired intangibles | 0.9 | % | ||||||||
Non-GAAP gross margin (low - high end of range) |
90 - 91 |
% |
|
|||||||
Operating expenses: | Q3 2015 | Fiscal 2015 | ||||||||
GAAP operating expenses (low - high end of range) |
|
|
||||||||
Stock-based compensation | (16 | ) | (66 | ) | ||||||
RSU dividend equivalent | (1 | ) | (2 | ) | ||||||
Amortization of acquired intangibles | (2 | ) | (7 | ) | ||||||
Non-GAAP operating expenses (low - high end of range) |
|
|
||||||||
Diluted earnings per share: | Q3 2015 | |||||||||
Low | High | |||||||||
GAAP diluted earnings per share | $ | 0.27 | $ | 0.33 | ||||||
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 | (0.05 | ) | (0.05 | ) | ||||||
Non-GAAP diluted earnings per share | $ | 0.43 | $ | 0.49 | ||||||
Shares used in computing diluted earnings per share (in millions) | 104 | 104 | ||||||||
Investor Contact:
investor@dolby.com
Media
Contact:
news@dolby.com
Source:
News Provided by Acquire Media