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Dolby Laboratories Reports Third Quarter Fiscal 2013 Financial Results
Third quarter GAAP net income was
"Licensing revenue increased year over year, with growth in our mobile
and broadcast businesses offsetting weaker demand for PCs and consumer
electronics this quarter," said
Financial Outlook
Q4 2013
The Company estimates that its fiscal Q4 2013 effective tax rate will range from 27% to 28% on both a GAAP and non-GAAP basis.
FISCAL YEAR 2013
The Company's Conference Call Information
Members of
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, but not limited to,
statements relating to Dolby's expected financial results for Q4 2013
and fiscal 2013 and
About
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per share amounts) |
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(unaudited) |
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Fiscal Quarter Ended | Fiscal Year-to-Date Ended | |||||||||||||||
2013 |
2012 |
2013 |
2012 |
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Revenue: | ||||||||||||||||
Licensing | $ | 184,707 | $ | 180,886 | $ | 616,038 | $ | 609,159 | ||||||||
Products | 17,381 | 22,132 | 60,605 | 75,760 | ||||||||||||
Services | 4,986 | 7,304 | 16,379 | 22,340 | ||||||||||||
Total revenue | 207,074 | 210,322 | 693,022 | 707,259 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Cost of licensing | 4,053 | 2,892 | 13,542 | 9,523 | ||||||||||||
Cost of products | 16,269 | 14,529 | 47,964 | 46,052 | ||||||||||||
Cost of services | 4,018 | 3,610 | 11,722 | 9,458 | ||||||||||||
Total cost of revenue | 24,340 | 21,031 | 73,228 | 65,033 | ||||||||||||
Gross margin | 182,734 | 189,291 | 619,794 | 642,226 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 42,915 | 35,123 | 127,299 | 102,185 | ||||||||||||
Sales and marketing | 58,528 | 49,269 | 175,079 | 138,779 | ||||||||||||
General and administrative | 38,413 | 36,859 | 123,324 | 109,605 | ||||||||||||
Restructuring charges / (credits) | 5,930 | (85 | ) | 5,930 | 1,193 | |||||||||||
Total operating expenses | 145,786 | 121,166 | 431,632 | 351,762 | ||||||||||||
Operating income | 36,948 | 68,125 | 188,162 | 290,464 | ||||||||||||
Interest income | 820 | 1,513 | 3,063 | 4,664 | ||||||||||||
Interest expense | (77 | ) | (26 | ) | (504 | ) | (57 | ) | ||||||||
Other income, net | 156 | 709 | 1,057 | 969 | ||||||||||||
Income before income taxes | 37,847 | 70,321 | 191,778 | 296,040 | ||||||||||||
Provision for income taxes | (7,345 | ) | (18,915 | ) | (47,560 | ) | (82,951 | ) | ||||||||
Net income including controlling interest | 30,502 | 51,406 | 144,218 | 213,089 | ||||||||||||
Less: net (income) / loss attributable to controlling interest | (286 | ) | 123 | (742 | ) | (281 | ) | |||||||||
Net income attributable to |
$ | 30,216 | $ | 51,529 | $ | 143,476 | $ | 212,808 | ||||||||
Net income per share: | ||||||||||||||||
Basic | $ | 0.30 | $ | 0.48 | $ | 1.41 | $ | 1.97 | ||||||||
Diluted | $ | 0.29 | $ | 0.48 | $ | 1.39 | $ | 1.96 | ||||||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic | 101,751 | 106,328 | 101,917 | 107,876 | ||||||||||||
Diluted | 103,031 | 107,202 | 102,999 | 108,493 | ||||||||||||
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CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands) |
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(unaudited) |
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2013 |
2012 |
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ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 408,561 | $ | 492,600 | |||
Short-term investments | 109,342 | 302,693 | |||||
Accounts receivable, net | 74,528 | 43,495 | |||||
Inventories | 12,795 | 16,700 | |||||
Deferred taxes | 79,114 | 80,966 | |||||
Prepaid expenses and other current assets | 30,200 | 33,832 | |||||
Total current assets | 714,540 | 970,286 | |||||
Long-term investments | 335,371 | 361,614 | |||||
Property, plant and equipment, net | 245,667 | 254,676 | |||||
Intangible assets, net | 44,736 | 56,526 | |||||
Goodwill | 278,718 | 281,375 | |||||
Deferred taxes | 36,591 | 22,634 | |||||
Other non-current assets | 11,827 | 13,687 | |||||
Total assets | $ | 1,667,450 | $ | 1,960,798 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 8,845 | $ | 14,831 | |||
Accrued liabilities | 119,154 | 116,092 | |||||
Income taxes payable | 1,012 | 2,424 | |||||
Deferred revenue | 23,233 | 23,493 | |||||
Total current liabilities | 152,244 | 156,840 | |||||
Long-term deferred revenue | 19,073 | 18,192 | |||||
Deferred taxes | — | 2,696 | |||||
Other non-current liabilities | 46,271 | 39,837 | |||||
Total liabilities | 217,588 | 217,565 | |||||
Stockholders' equity: | |||||||
Class A common stock | 47 | 46 | |||||
Class B common stock | 55 | 57 | |||||
Additional paid-in capital | 17,111 | — | |||||
Retained earnings | 1,408,587 | 1,709,479 | |||||
Accumulated other comprehensive income | 5,812 | 10,687 | |||||
Total stockholders' equity — |
1,431,612 | 1,720,269 | |||||
Controlling interest | 18,250 | 22,964 | |||||
Total stockholders' equity | 1,449,862 | 1,743,233 | |||||
Total liabilities and stockholders' equity | $ | 1,667,450 | $ | 1,960,798 | |||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
(in thousands) |
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(unaudited) |
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Fiscal Quarter Ended | Fiscal Year-to-Date Ended | |||||||||||||||
2013 |
2012 |
2013 |
2012 |
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Operating activities: | ||||||||||||||||
Net income including controlling interest | $ | 30,502 | $ | 51,406 | $ | 144,218 | $ | 213,089 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 13,195 | 11,086 | 39,615 | 31,189 | ||||||||||||
Stock-based compensation | 17,283 | 10,741 | 49,932 | 34,243 | ||||||||||||
Amortization of premium on investments | 2,148 | 3,974 | 8,101 | 13,280 | ||||||||||||
Excess tax benefit from exercise of stock options | (17 | ) | (516 | ) | (621 | ) | (941 | ) | ||||||||
Provision for doubtful accounts | (359 | ) | 317 | (89 | ) | 449 | ||||||||||
Deferred income taxes | (2,396 | ) | 2,955 | (12,973 | ) | (7,075 | ) | |||||||||
Other non-cash items affecting net income | 72 | (2,199 | ) | (800 | ) | 38 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | 17,119 | 11,256 | (30,829 | ) | 15,359 | |||||||||||
Inventories | 6,390 | 4,399 | 5,636 | 5,275 | ||||||||||||
Prepaid expenses and other assets | 4,023 | 1,710 | 6,924 | 582 | ||||||||||||
Accounts payable and other liabilities | 1,302 | 11,154 | (840 | ) | (1,567 | ) | ||||||||||
Income taxes, net | (7,586 | ) | (7,251 | ) | (3,164 | ) | 6,857 | |||||||||
Deferred revenue | 2,644 | (1,057 | ) | 655 | (221 | ) | ||||||||||
Other non-current liabilities | 295 | 354 | 1,723 | 2,441 | ||||||||||||
Net cash provided by operating activities | 84,615 | 98,329 | 207,488 | 312,998 | ||||||||||||
Investing activities: | ||||||||||||||||
Purchases of available-for-sale securities | (90,691 | ) | (309,645 | ) | (413,688 | ) | (431,894 | ) | ||||||||
Proceeds from sales of available-for-sale securities | 67,004 | 156,066 | 534,109 | 261,520 | ||||||||||||
Proceeds from maturities of available-for-sale securities | 27,900 | 91,400 | 92,850 | 202,915 | ||||||||||||
Purchases of property, plant and equipment | (5,637 | ) | (19,775 | ) | (17,801 | ) | (50,225 | ) | ||||||||
Acquisitions, net of cash acquired | — | — | — | (575 | ) | |||||||||||
Other investments | — | — | (3,000 | ) | — | |||||||||||
Purchases of intangible assets | — | (350 | ) | (4,050 | ) | (350 | ) | |||||||||
Proceeds from sales of property, plant and equipment and assets held for sale | — | 273 | 376 | 988 | ||||||||||||
Net cash provided by / (used in) investing activities | (1,424 | ) | (82,031 | ) | 188,796 | (17,621 | ) | |||||||||
Financing activities: | ||||||||||||||||
Proceeds from issuance of common stock | 6,414 | 9,565 | 13,616 | 16,196 | ||||||||||||
Repurchase of common stock | (8,709 | ) | (103,810 | ) | (74,142 | ) | (189,959 | ) | ||||||||
Payment of cash dividend | — | — | (408,206 | ) | — | |||||||||||
Distribution to controlling interest | — | — | (5,039 | ) | — | |||||||||||
Excess tax benefit from the exercise of stock options | 17 | 516 | 621 | 941 | ||||||||||||
Shares repurchased for tax withholdings on vesting of restricted stock | (577 | ) | (273 | ) | (5,709 | ) | (3,380 | ) | ||||||||
Net cash used in financing activities | (2,855 | ) | (94,002 | ) | (478,859 | ) | (176,202 | ) | ||||||||
Effect of foreign exchange rate changes on cash and cash equivalents | (283 | ) | 124 | (1,464 | ) | (279 | ) | |||||||||
Net increase / (decrease) in cash and cash equivalents | 80,053 | (77,580 | ) | (84,039 | ) | 118,896 | ||||||||||
Cash and cash equivalents at beginning of period | 328,508 | 747,988 | 492,600 | 551,512 | ||||||||||||
Cash and cash equivalents at end of period | $ | 408,561 | $ | 670,408 | $ | 408,561 | $ | 670,408 | ||||||||
GAAP to Non-GAAP Reconciliations | ||||||||
(In millions, except per share data) | ||||||||
The following tables present the Company's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the third fiscal quarter of 2013 and 2012: | ||||||||
Net income: | Fiscal Quarter Ended | |||||||
2013 |
2012 |
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GAAP net income | $ | 30.2 | $ | 51.5 | ||||
Stock-based compensation1 |
15.4 | 10.7 | ||||||
RSU dividend equivalent | 1.1 | — | ||||||
Amortization of acquired intangibles | 3.3 | 2.5 | ||||||
Restructuring charges, net | 5.9 | — | ||||||
Income tax adjustments | (7.4 | ) | (3.9 | ) | ||||
Non-GAAP net income | $ | 48.5 | $ | 60.8 | ||||
Diluted earnings per share: | Fiscal Quarter Ended | |||||||
2013 |
2012 |
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GAAP diluted earnings per share | $ | 0.29 | $ | 0.48 | ||||
Stock-based compensation | 0.15 | 0.10 | ||||||
RSU dividend equivalent | 0.01 | — | ||||||
Amortization of acquired intangibles | 0.03 | 0.02 | ||||||
Restructuring charges, net | 0.06 | — | ||||||
Income tax adjustments | (0.07 | ) | (0.03 | ) | ||||
Non-GAAP diluted earnings per share | $ | 0.47 | $ | 0.57 | ||||
Shares used in computing diluted earnings per share (in millions) | 103 | 107 | ||||||
The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial amounts for the fourth fiscal quarter of 2013 and fiscal year 2013 included in this release: | ||||||||
Gross margin: | Q4 2013 | |||||||
GAAP gross margin | 90 | % | ||||||
Stock-based compensation | — | % | ||||||
RSU dividend equivalent | — | % | ||||||
Amortization of acquired intangibles | 1 | % | ||||||
Non-GAAP gross margin | 91 | % | ||||||
Operating expenses: | Q4 2013 | Fiscal Year 2013 | ||||||
GAAP operating expenses | $ | 142 | $ | 574 | ||||
Stock-based compensation | (16 | ) | (64 | ) | ||||
RSU dividend equivalent | (1 | ) | (4 | ) | ||||
Amortization of acquired intangibles | (1 | ) | (4 | ) | ||||
Restructuring charges, net | — | (6 | ) | |||||
Non-GAAP operating expenses | $ | 124 | $ | 496 | ||||
Diluted earnings per share: | Q4 2013 | |||||||
Low | High | |||||||
GAAP diluted earnings per share | $ | 0.30 | $ | 0.36 | ||||
Stock-based compensation | 0.16 | 0.17 | ||||||
RSU dividend equivalent | 0.01 | 0.01 | ||||||
Amortization of acquired intangibles | 0.03 | 0.03 | ||||||
Restructuring charges, net | — | — | ||||||
Income tax adjustments | (0.05 | ) | (0.06 | ) | ||||
Non-GAAP diluted earnings per share | $ | 0.45 | $ | 0.51 | ||||
Shares used in computing diluted earnings per share (in millions) | 103 | 103 | ||||||
1 Excludes |
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