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Dolby Laboratories Reports Third Quarter Fiscal 2012 Results
For the third quarter,
Third quarter GAAP net income was
"Though we are updating our outlook to reflect a challenging global
economy, we continue to execute on our long-term growth initiatives,"
said
Financial Outlook
For fiscal 2012,
GAAP
For fiscal 2012, gross margin is estimated to be approximately 90
percent, operating expenses are expected to range from
Non-GAAP
For fiscal 2012, gross margin is estimated to be approximately 91
percent, operating expenses are expected to range from
Diluted Earnings per Share
The Company's Conference Call Information
Members of Dolby Laboratories' management will lead a conference call
open to all interested parties to discuss the Company's Q3 fiscal 2012
financial results at
Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm.
To access the conference by phone, callers can dial 1-888-471-3841 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 its long-term growth
initiatives and growth from its presence in the smartphone market, as
well as anticipated performance of newly released technologies 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
About
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per share amounts)
(unaudited) |
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Fiscal Quarter Ended | Fiscal Year-to-Date Ended | |||||||||||||||
July 1, 2011 |
June 29, 2012 |
July 1, 2011 |
June 29, 2012 |
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Revenue: | ||||||||||||||||
Licensing | $ | 181,790 | $ | 178,436 | $ | 584,593 | $ | 603,409 | ||||||||
Products | 28,395 | 22,132 | 100,769 | 75,760 | ||||||||||||
Services | 8,814 | 7,304 | 26,375 | 22,340 | ||||||||||||
Total revenue | 218,999 | 207,872 | 711,737 | 701,509 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Cost of licensing | 4,095 | 2,892 | 13,827 | 9,523 | ||||||||||||
Cost of products | 20,320 | 14,529 | 62,549 | 46,052 | ||||||||||||
Cost of services | 3,518 | 3,610 | 9,153 | 9,458 | ||||||||||||
Total cost of revenue | 27,933 | 21,031 | 85,529 | 65,033 | ||||||||||||
Gross margin | 191,066 | 186,841 | 626,208 | 636,476 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 34,086 | 35,123 | 90,812 | 102,185 | ||||||||||||
Sales and marketing | 36,726 | 46,819 | 112,488 | 133,029 | ||||||||||||
General and administrative | 32,397 | 36,859 | 104,594 | 109,605 | ||||||||||||
Restructuring charges, net | (48 | ) | (85 | ) | 737 | 1,193 | ||||||||||
Total operating expenses | 103,161 | 118,716 | 308,631 | 346,012 | ||||||||||||
Operating income | 87,905 | 68,125 | 317,577 | 290,464 | ||||||||||||
Other income, net | 2,546 | 2,196 | 6,434 | 5,576 | ||||||||||||
Income before income taxes | 90,451 | 70,321 | 324,011 | 296,040 | ||||||||||||
Provision for income taxes | (28,404 | ) | (18,915 | ) | (92,717 | ) | (82,951 | ) | ||||||||
Net income including controlling interest | 62,047 | 51,406 | 231,294 | 213,089 | ||||||||||||
Less: net (income) / loss attributable to controlling interest | (299 | ) | 123 | (1,098 | ) | (281 | ) | |||||||||
Net income attributable to |
$ | 61,748 | $ | 51,529 | $ | 230,196 | $ | 212,808 | ||||||||
Basic earnings per share | $ | 0.55 | $ | 0.48 | $ | 2.06 | $ | 1.97 | ||||||||
Diluted earnings per share | $ | 0.55 | $ | 0.48 | $ | 2.03 | $ | 1.96 | ||||||||
Weighted-average shares outstanding (basic) | 111,494 | 106,328 | 111,893 | 107,876 | ||||||||||||
Weighted-average shares outstanding (diluted) | 112,349 | 107,202 | 113,165 | 108,493 | ||||||||||||
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(in thousands)
(unaudited) |
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September 30, |
June 29, |
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ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 551,512 | $ | 670,408 | |||
Short-term investments | 391,281 | 322,399 | |||||
Accounts receivable, net | 61,815 | 46,034 | |||||
Inventories | 26,244 | 12,760 | |||||
Deferred taxes | 90,869 | 89,983 | |||||
Prepaid expenses and other current assets | 36,877 | 27,447 | |||||
Total current assets | 1,158,598 | 1,169,031 | |||||
Long-term investments | 272,797 | 295,950 | |||||
Property, plant and equipment, net | 117,107 | 140,127 | |||||
Intangible assets, net | 51,573 | 42,115 | |||||
Goodwill | 263,260 | 263,536 | |||||
Deferred taxes | 14,779 | 22,157 | |||||
Other non-current assets | 6,273 | 20,639 | |||||
Total assets | $ | 1,884,387 | $ | 1,953,555 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 127,922 | $ | 124,192 | |||
Income taxes payable | 4,762 | 3,147 | |||||
Deferred revenue | 26,701 | 25,099 | |||||
Total current liabilities | 159,385 | 152,438 | |||||
Long-term deferred revenue | 15,526 | 16,878 | |||||
Deferred taxes | 671 | 615 | |||||
Other non-current liabilities | 23,455 | 32,562 | |||||
Total liabilities | 199,037 | 202,493 | |||||
Stockholders' equity: | |||||||
Class A common stock | 52 | 48 | |||||
Class B common stock | 58 | 57 | |||||
Additional paid-in capital | 210,681 | 64,969 | |||||
Retained earnings | 1,445,189 | 1,657,997 | |||||
Accumulated other comprehensive income | 7,533 | 5,897 | |||||
Total stockholders' equity - |
1,663,513 | 1,728,968 | |||||
Controlling interest | 21,837 | 22,094 | |||||
Total stockholders' equity | 1,685,350 | 1,751,062 | |||||
Total liabilities and stockholders' equity | $ | 1,884,387 | $ | 1,953,555 | |||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(in thousands)
(unaudited) |
||||||||||||||||
Fiscal Quarter Ended |
Fiscal Year-to-Date Ended | |||||||||||||||
July 1, |
June 29, |
July 1, |
June 29, |
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Operating activities: | ||||||||||||||||
Net income including controlling interest | $ | 62,047 | $ | 51,406 | $ | 231,294 | $ | 213,089 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 12,930 | 11,086 | 33,975 | 31,189 | ||||||||||||
Stock-based compensation expense | 10,916 | 10,741 | 32,916 | 34,243 | ||||||||||||
Amortization of premium on investments | 4,570 | 3,974 | 12,375 | 13,280 | ||||||||||||
Excess tax benefit from exercise of stock options | (1,338 | ) | (516 | ) | (12,643 | ) | (941 | ) | ||||||||
Provision for doubtful accounts | (28 | ) | 317 | 828 | 449 | |||||||||||
Deferred taxes | 2,045 | 2,955 | 1,573 | (7,075 | ) | |||||||||||
Payment on litigation settlement | (3,000 | ) | — | (3,000 | ) | — | ||||||||||
Other non-cash items affecting net income | 18 | (2,199 | ) | 175 | 38 | |||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 34,283 | 11,256 | 14,065 | 15,359 | ||||||||||||
Inventories | 7,965 | 4,399 | 4,927 | 5,275 | ||||||||||||
Prepaid expenses and other assets | (3,003 | ) | 1,710 | (6,718 | ) | 582 | ||||||||||
Accounts payable and other liabilities | (14,016 | ) | 11,508 | (27,394 | ) | 874 | ||||||||||
Income taxes, net | 5,766 | (7,251 | ) | 6,386 | 6,857 | |||||||||||
Deferred revenues | 3,412 | (1,057 | ) | 5,400 | (221 | ) | ||||||||||
Net cash provided by operating activities | 122,567 | 98,329 | 294,159 | 312,998 | ||||||||||||
Investing activities: | ||||||||||||||||
Purchases of available-for-sale securities | (86,788 | ) | (309,645 | ) | (454,795 | ) | (431,894 | ) | ||||||||
Proceeds from sales of available-for-sale securities | 53,957 | 156,066 | 169,419 | 261,520 | ||||||||||||
Proceeds from maturities of available-for-sale securities | 53,286 | 91,400 | 176,200 | 202,915 | ||||||||||||
Purchases of property, plant and equipment | (10,782 | ) | (19,775 | ) | (30,334 | ) | (50,225 | ) | ||||||||
Acquisitions, net of cash acquired | — | — | (3,350 | ) | (575 | ) | ||||||||||
Purchases of intangible assets | — | (350 | ) | — | (350 | ) | ||||||||||
Proceeds from sales of property, plant and equipment and assets held for sale | 280 | 273 | 3,077 | 988 | ||||||||||||
Net cash provided by/(used in) investing activities | 9,953 | (82,031 | ) | (139,783 | ) | (17,621 | ) | |||||||||
Financing activities: | ||||||||||||||||
Proceeds from issuance of common stock, net of shares withheld for taxes | 7,705 | 9,292 | 22,920 | 12,816 | ||||||||||||
Repurchase of common stock | (67,376 | ) | (103,810 | ) | (142,500 | ) | (189,959 | ) | ||||||||
Excess tax benefit from exercise of stock options | 1,338 | 516 | 12,643 | 941 | ||||||||||||
Net cash used in financing activities | (58,333 | ) | (94,002 | ) | (106,937 | ) | (176,202 | ) | ||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | 149 | 124 | 1,304 | (279 | ) | |||||||||||
Net increase/(decrease) in cash and cash equivalents | 74,336 | (77,580 | ) | 48,743 | 118,896 | |||||||||||
Cash and cash equivalents at beginning of period | 520,268 | 747,988 | 545,861 | 551,512 | ||||||||||||
Cash and cash equivalents at end of period | $ | 594,604 | $ | 670,408 | $ | 594,604 | $ | 670,408 | ||||||||
GAAP to Non-GAAP Reconciliations |
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(In millions, except per share data) | ||||||||
The following tables show the Company's third quarter of fiscal years 2011 and 2012 GAAP financial measures reconciled to non-GAAP financial measures included in this release: | ||||||||
Net income: | Fiscal Quarter Ended | |||||||
July 1, 2011 |
June 29, 2012 |
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(in thousands) | ||||||||
GAAP net income | $ | 61.7 | $ | 51.5 | ||||
Stock-based compensation | 10.9 | 10.7 | ||||||
Amortization of acquired intangibles | 5.2 | 2.5 | ||||||
Restructuring charges, net | — | — | ||||||
Income tax adjustments | (5.0 | ) | (3.9 | ) | ||||
Non-GAAP net income | $ | 72.8 | $ | 60.8 | ||||
Diluted earnings per share: | Fiscal Quarter Ended | |||||||
July 1, 2011 |
June 29, 2012 |
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GAAP diluted earnings per share | $ | 0.55 | $ | 0.48 | ||||
Stock-based compensation | 0.10 | 0.10 | ||||||
Amortization of acquired intangibles | 0.05 | 0.02 | ||||||
Restructuring charges, net | — | — | ||||||
Income tax adjustments | (0.05 | ) | (0.03 | ) | ||||
Non-GAAP diluted earnings per share | $ | 0.65 | $ | 0.57 | ||||
Shares used in computing diluted earnings per share (in millions) | 112 | 107 | ||||||
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 | — | % | ||||||
Amortization of acquired intangibles | 1 | % | ||||||
Non-GAAP gross margin | 91 | % | ||||||
Product gross margin: | Fiscal Year 2012 | |||||||
Low | High | |||||||
GAAP products gross margin | 37 | % | 38 | % | ||||
Stock-based compensation | 1 | % | 1 | % | ||||
Amortization of acquired intangibles | 2 | % | 2 | % | ||||
Non-GAAP products gross margin | 40 | % | 41 | % | ||||
Operating expenses: | Fiscal Year 2012 | |||||||
Low | High | |||||||
GAAP operating expenses | $ | 467 | $ | 473 | ||||
Stock-based compensation | (47 | ) | (47 | ) | ||||
Amortization of acquired intangibles | (4 | ) | (4 | ) | ||||
Restructuring charges, net | (1 | ) | (2 | ) | ||||
Non-GAAP operating expenses | $ | 415 | $ | 420 | ||||
Diluted earnings per share: | Fiscal Year 2012 | |||||||
Low | High | |||||||
GAAP diluted earnings per share | $ | 2.35 | $ | 2.43 | ||||
Stock-based compensation | 0.44 | 0.44 | ||||||
Amortization of acquired intangibles | 0.10 | 0.10 | ||||||
Restructuring charges, net | 0.01 | 0.02 | ||||||
Income tax adjustments | (0.15 | ) | (0.16 | ) | ||||
Non-GAAP diluted earnings per share | $ | 2.75 | $ | 2.83 | ||||
Shares used in computing diluted earnings per share | 108 | 108 |
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