Exhibit 99.1
Dolby Laboratories Reports Second-Quarter Fiscal 2008 Results
Second-quarter EPS grows 44 percent year-over-year
SAN FRANCISCO--(BUSINESS WIRE)--Dolby Laboratories, Inc. (NYSE:DLB) today announced the Company's financial results for its second quarter of fiscal 2008.
For the second quarter, Dolby reported total revenue of $172.6 million, compared to $129.0 million for the second quarter of fiscal 2007, an increase of 34 percent. Second-quarter net income was $56.8 million, or $0.49 per diluted share, compared to $39.1 million, or $0.34 per diluted share, for the second quarter of fiscal 2007.
Net income for the second quarter of fiscal 2008 reflects stock-based compensation expense of $6.1 million compared to $4.8 million for the second quarter of fiscal 2007. Net income for the second quarter of fiscal 2008 also reflects charges related to the amortization of intangibles of $4.1 million, compared to $0.6 million for the second quarter of fiscal 2007.
"We experienced another strong quarter across many of our global markets, including PC, gaming, and broadcast,” said Bill Jasper, President and Chief Executive Officer, Dolby Laboratories. "With our position in entertainment technology, we remain focused on developing and delivering innovations that improve the digital media experience.”
Guidance
Dolby now expects fiscal 2008 revenue to be $585 million to $615 million. Net income is now expected to be $170 million to $182 million. Earnings per diluted share is now expected to be $1.47 to $1.57. While under FAS 123R stock-based compensation expense may vary based on factors such as stock price or volatility, Dolby now expects stock-based compensation expense for the full year to be approximately $22 million. In addition, Dolby now expects charges related to the amortization of intangibles for fiscal 2008 to be approximately $13 million.
As part of Dolby’s updated fiscal 2008 guidance, Dolby now expects increased licensing revenue and lower products and services revenue compared to its prior expectations. The higher licensing revenue expectations are the result of expected increased revenue from the PC market, while the lower products and services revenue expectations are due to the expectation that product revenue related to digital cinema will be deferred through fiscal 2008. Since licensing revenue carries a significantly higher margin than products and services revenue, Dolby now expects profitability to be higher in fiscal 2008 than its prior guidance.
The Company's Conference Call Information
Members of Dolby management will lead a conference call open to all interested parties to discuss Dolby Laboratories’ Q2 fiscal 2008 financial results at 2:00 p.m. PT/5:00 p.m. ET, Thursday, May 1, 2008.
Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm or by dialing 888-713-3588. International callers can access the conference call at 913-981-4903.
A replay of the call will be available beginning at 5:00 p.m. PT on May 1 until 9:00 p.m. PT on May 8, 2008; dial 888-203-1112 (international callers can access the replay by dialing 719-457-0820) and enter confirmation code 9142240. An archived version of the teleconference will also be available on Dolby Laboratories’ website, www.dolby.com.
Forward-Looking Statements
Certain statements in this press release, including statements relating to Dolby's expectations regarding revenue, including licensing revenue and products and services revenue, net income, earnings per diluted share, margin, stock-based compensation expense, charges relating to the amortization of intangibles, the licensing revenue related to the performance of the PC market and the deferral of product revenue related to digital cinema for the fiscal year ending September 26, 2008, Dolby’s strength across its global markets, Dolby’s position in entertainment technology and focus on developing and delivering innovations that improve the digital media experience, including long-term growth opportunities, that may be derived therefrom, 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 DVD and next-generation DVD, broadcast, personal computer, gaming, mobile, or portable device markets, and trends relating to the development of additional and newer markets for Dolby technologies; the timing and effects of economic downturns in the United States and abroad; pricing pressures; the timing of Dolby's receipt of royalty reports and/or payments from its licensees; 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 in the entertainment industry; competitive risks; risks associated with conducting business in China and other countries, including countries that have historically limited recognition and enforcement of intellectual property and contractual rights; risks associated with the motion picture industry generally; the development and growth of the market for digital cinema and digital 3D and Dolby’s ability to successfully penetrate this market; Dolby’s ability to expand its business generally, and to expand its business beyond sound technologies to other technologies related to digital entertainment delivery, including by acquiring and successfully integrating businesses or technologies; and other risks detailed in Dolby’s Securities and Exchange Commission filings and reports, including the risks identified under the section captioned “Risk Factors” in its most recent Quarterly Report on Form 10-Q. Dolby disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.
About Dolby Laboratories
Dolby Laboratories (NYSE:DLB) develops and delivers products and technologies around the world that make the entertainment experience more realistic and immersive. For more than four decades, Dolby has been at the forefront of defining high-quality audio and surround sound in cinema, broadcast, home audio systems, cars, DVDs, headphones, games, televisions, and personal computers. For more information about Dolby Laboratories or Dolby® technologies, please visit www.dolby.com.
Dolby and the double-D symbol are registered trademarks of Dolby Laboratories. S08/19736 DLB-F
| DOLBY LABORATORIES, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| | | | | | | | |
| | | | | | | | |
| | Fiscal Quarter Ended | | Fiscal Year-to-Date Ended |
| | March 30, 2007 | | March 28, 2008 | | March 30, 2007 | | March 28, 2008 |
| | (unaudited) |
| | (in thousands, except per share amounts) |
| Revenue: | | | | | | | | |
| Licensing | | $ | 106,642 | | | $ | 149,619 | | | $ | 189,017 | | | $ | 272,049 | |
| Product sales | | | 15,469 | | | | 15,628 | | | | 30,679 | | | | 35,638 | |
| Services | | | 6,899 | | | | 7,310 | | | | 13,756 | | | | 15,097 | |
| Total revenue | | | 129,010 | | | | 172,557 | | | | 233,452 | | | | 322,784 | |
| | | | | | | | |
| Cost of revenue: | | | | | | | | |
| Cost of licensing | | | 10,149 | | | | 5,555 | | | | 17,809 | | | | 8,818 | |
Cost of product sales (1) | | | 7,714 | | | | 8,540 | | | | 16,400 | | | | 20,188 | |
Cost of services (1) | | | 2,824 | | | | 3,151 | | | | 5,507 | | | | 6,206 | |
| Total cost of revenue | | | 20,687 | | | | 17,246 | | | | 39,716 | | | | 35,212 | |
| Gross margin | | | 108,323 | | | | 155,311 | | | | 193,736 | | | | 287,572 | |
| Operating expenses: | | | | | | | | |
Selling, general and administrative (1) | | | 42,525 | | | | 55,310 | | | | 79,836 | | | | 106,296 | |
Research and development (1) | | | 10,960 | | | | 15,725 | | | | 19,796 | | | | 29,632 | |
| Gain on settlements | | | (1,500 | ) | | | (249 | ) | | | (1,500 | ) | | | (249 | ) |
| Total operating expenses | | | 51,985 | | | | 70,786 | | | | 98,132 | | | | 135,679 | |
| Operating income | | | 56,338 | | | | 84,525 | | | | 95,604 | | | | 151,893 | |
| Other income, net | | | 5,932 | | | | 2,404 | | | | 11,359 | | | | 7,608 | |
| Income before provision for income taxes and controlling interest | | | 62,270 | | | | 86,929 | | | | 106,963 | | | | 159,501 | |
| Provision for income taxes | | | (22,776 | ) | | | (29,792 | ) | | | (37,228 | ) | | | (54,399 | ) |
| Income before controlling interest | | | 39,494 | | | | 57,137 | | | | 69,735 | | | | 105,102 | |
| Controlling interest in net income, net of tax | | | (399 | ) | | | (359 | ) | | | (747 | ) | | | (651 | ) |
| Net income | | $ | 39,095 | | | $ | 56,778 | | | $ | 68,988 | | | $ | 104,451 | |
| | | | | | | | |
| | | | | | | | |
| Basic earnings per share | | $ | 0.36 | | | $ | 0.51 | | | $ | 0.64 | | | $ | 0.94 | |
| Diluted earnings per share | | $ | 0.34 | | | $ | 0.49 | | | $ | 0.61 | | | $ | 0.91 | |
| | | | | | | | |
| Weighted-average shares outstanding (basic) | | | 109,055 | | | | 111,192 | | | | 108,501 | | | | 110,892 | |
| Weighted-average shares outstanding (diluted) | | | 113,412 | | | | 114,736 | | | | 113,165 | | | | 114,579 | |
| | | | | | | | |
| | | | | | | | |
(1) Stock-based compensation included above was classified as follows: | | | | | | | | |
| Cost of product sales | | $ | 192 | | | $ | 262 | | | $ | 410 | | | $ | 503 | |
| Cost of services | | | 31 | | | | 38 | | | | 68 | | | | 78 | |
| Selling, general and administrative | | | 3,762 | | | | 4,600 | | | | 7,621 | | | | 8,895 | |
| Research and development | | | 772 | | | | 1,229 | | | | 1,519 | | | | 2,119 | |
| DOLBY LABORATORIES, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| | | | |
| | September 28, 2007 | | March 28, 2008 |
| | (unaudited) |
| | (in thousands) |
| ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 368,467 | | $ | 347,502 |
| Short-term investments | | | 231,217 | | | 28,905 |
| Accounts receivable, net | | | 28,165 | | | 43,399 |
| Inventories | | | 14,883 | | | 20,153 |
| Deferred income taxes | | | 73,686 | | | 81,874 |
| Prepaid expenses and other current assets | | | 17,000 | | | 27,596 |
| Total current assets | | | 733,418 | | | 549,429 |
| | | | | | |
| Property, plant and equipment, net | | | 85,552 | | | 84,565 |
| Intangible assets, net | | | 35,389 | | | 93,863 |
| Goodwill | | | 39,364 | | | 272,542 |
| Long-term investments | | | 73,224 | | | 165,880 |
| Long-term deferred income taxes | | | 12,393 | | | 11,956 |
| Other assets | | | 12,357 | | | 13,033 |
| Total assets | | $ | 991,697 | | $ | 1,191,268 |
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | |
| Current liabilities: | | | | |
| Accounts payable and accrued liabilities | | $ | 119,068 | | $ | 131,006 |
| Income taxes payable | | | 9,051 | | | 2,069 |
| Current portion of long-term debt | | | 1,563 | | | 1,591 |
| Deferred revenue | | | 13,522 | | | 24,594 |
| Total current liabilities | | | 143,204 | | | 159,260 |
| | | | | | |
| Long-term debt | | | 9,691 | | | 8,810 |
| Long-term deferred revenue | | | 5,073 | | | 5,221 |
| Deferred income tax liability | | | - | | | 19,001 |
| Other non-current liabilities | | | 14,294 | | | 28,914 |
| Total liabilities | | | 172,262 | | | 221,206 |
| | | | | | |
| Controlling interest | | | 22,279 | | | 22,392 |
| Stockholders' equity: | | | | |
| Class A common stock | | | 49 | | | 51 |
| Class B common stock | | | 61 | | | 61 |
| Additional paid-in capital | | | 375,830 | | | 407,599 |
| Retained earnings | | | 409,749 | | | 514,488 |
| Accumulated other comprehensive income | | | 11,467 | | | 25,471 |
| Total stockholders' equity | | | 797,156 | | | 947,670 |
| Total liabilities and stockholders' equity | | $ | 991,697 | | $ | 1,191,268 |
CONTACT:
Dolby Laboratories (Investor)
Alex Hughes, 415-645-4572
investor@dolby.com
or
Dolby Laboratories (Media)
Jeanne Alford, 415-645-5000
news@dolby.com
