Exhibit 99.1
Dolby Laboratories Reports Third Quarter Fiscal 2008 Results
Third quarter EPS grows 56 percent year-over-year
SAN FRANCISCO--(BUSINESS WIRE)--Dolby Laboratories, Inc. (NYSE:DLB) today announced the Company's financial results for its third quarter of fiscal 2008.
For the third quarter, Dolby reported total revenue of $154.3 million, compared to $119.6 million for the third quarter of fiscal 2007, an increase of 29 percent. Third quarter net income was $46.4 million, or $0.40 per diluted share, compared to $29.7 million, or $0.26 per diluted share, for the third quarter of fiscal 2007.
Net income for the third quarter of fiscal 2008 reflects stock-based compensation expense of $5.6 million compared to $5.1 million for the third quarter of fiscal 2007. Net income for the third quarter of fiscal 2008 also reflects charges related to the amortization of intangibles of $3.0 million compared to $1.0 million for the third quarter of fiscal 2007.
"During the quarter, we experienced strong financial results while continuing to make progress in key initiatives such as PC Entertainment Experience and Dolby Mobile,” said Bill Jasper, President and Chief Executive Officer, Dolby Laboratories. “Earlier this week, LG, a global technology and design leader in mobile communications, announced it would introduce high-end multimedia handsets with Dolby Mobile by the end of calendar year 2008.”
Guidance
Dolby now expects fiscal 2008 revenue to be $605 million to $625 million. Net income for fiscal 2008 is now expected to be $181 million to $190 million. Earnings per diluted share is now expected to be $1.57 to $1.65. 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 fiscal 2008 to be approximately $23 million. In addition, Dolby continues to expect charges related to the amortization of intangibles for fiscal 2008 to be approximately $13 million.
The Company's Conference Call Information
Members of Dolby management will lead a conference call open to all interested parties to discuss Dolby Laboratories’ Q3 fiscal 2008 financial results at 2:00 p.m. PT/5:00 p.m. ET, Thursday, July 31, 2008.
Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm or by dialing 1-888-228-5281. International callers can access the conference call at 1-913-312-1423.
A replay of the call will be available beginning at 5:00 p.m. PT on July 31, 2008 until 9:00 p.m. PT on August 7, 2008; dial 1-888-203-1112 (international callers can access the replay by dialing 1-719-457-0820) and enter confirmation code 8298423. 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, net income, earnings per diluted share, stock-based compensation expense, and charges relating to the amortization of intangibles, for the fiscal year ending September 26, 2008, Dolby’s continued progress on key initiatives such as PC Entertainment Experience and Dolby® Mobile, and the timing and availability of LG handsets with Dolby Mobile 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 trends related to DVD and Blu-ray™ 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 risk that LG may not ship handsets with Dolby Mobile by calendar year end or at all; 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) is the global leader in technologies that are essential elements in the best entertainment experiences. Founded in 1965 and best known for high-quality audio and surround sound, Dolby innovations enrich entertainment at the movies, at home, or on the go. Visit www.dolby.com for more information.
Dolby and the double-D symbol are registered trademarks of Dolby Laboratories. S08/20185 DLB-F
| DOLBY LABORATORIES, INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
| | | | | | | | |
| | | | | | | | |
| | Fiscal Quarter Ended | | Fiscal Year-to-Date Ended |
| | June 29, 2007 | | June 27, 2008 | | June 29, 2007 | | June 27, 2008 |
| | (unaudited) |
| | (in thousands, except per share amounts) |
| Revenue: | | | | | | | | |
| Licensing | | $ | 94,795 | | | $ | 127,558 | | | $ | 283,812 | | | $ | 399,607 | |
| Product sales | | | 17,191 | | | | 18,060 | | | | 47,870 | | | | 53,698 | |
| Services | | | 7,627 | | | | 8,699 | | | | 21,383 | | | | 23,796 | |
| Total revenue | | | 119,613 | | | | 154,317 | | | | 353,065 | | | | 477,101 | |
| | | | | | | | |
| Cost of revenue: | | | | | | | | |
| Cost of licensing | | | 8,478 | | | | 3,361 | | | | 26,287 | | | | 12,179 | |
Cost of product sales(1) | | | 8,119 | | | | 9,461 | | | | 24,519 | | | | 29,649 | |
Cost of services(1) | | | 2,963 | | | | 3,194 | | | | 8,470 | | | | 9,400 | |
| Total cost of revenue | | | 19,560 | | | | 16,016 | | | | 59,276 | | | | 51,228 | |
| Gross margin | | | 100,053 | | | | 138,301 | | | | 293,789 | | | | 425,873 | |
| Operating expenses: | | | | | | | | |
Selling, general and administrative(1) | | | 48,430 | | | | 54,979 | | | | 128,266 | | | | 161,275 | |
Research and development(1) | | | 11,854 | | | | 15,366 | | | | 31,650 | | | | 44,998 | |
| Gain on settlements | | | (350 | ) | | | (250 | ) | | | (1,850 | ) | | | (499 | ) |
| Total operating expenses | | | 59,934 | | | | 70,095 | | | | 158,066 | | | | 205,774 | |
| Operating income | | | 40,119 | | | | 68,206 | | | | 135,723 | | | | 220,099 | |
| Other income, net | | | 5,759 | | | | 2,661 | | | | 17,118 | | | | 10,269 | |
| Income before provision for income taxes and controlling interest | | | 45,878 | | | | 70,867 | | | | 152,841 | | | | 230,368 | |
| Provision for income taxes | | | (15,839 | ) | | | (24,117 | ) | | | (53,067 | ) | | | (78,516 | ) |
| Income before controlling interest | | | 30,039 | | | | 46,750 | | | | 99,774 | | | | 151,852 | |
| Controlling interest in net income, net of tax | | | (354 | ) | | | (302 | ) | | | (1,101 | ) | | | (953 | ) |
| Net income | | $ | 29,685 | | | $ | 46,448 | | | $ | 98,673 | | | $ | 150,899 | |
| | | | | | | | |
| | | | | | | | |
| Basic earnings per share | | $ | 0.27 | | | $ | 0.42 | | | $ | 0.91 | | | $ | 1.36 | |
| Diluted earnings per share | | $ | 0.26 | | | $ | 0.40 | | | $ | 0.87 | | | $ | 1.32 | |
| | | | | | | | |
| Weighted-average shares outstanding (basic) | | | 109,692 | | | | 111,844 | | | | 108,898 | | | | 111,209 | |
| Weighted-average shares outstanding (diluted) | | | 113,696 | | | | 114,875 | | | | 113,389 | | | | 114,672 | |
| | | | | | | | |
| | | | | | | | |
| (1) Stock-based compensation included above was classified as follows: | | | | | | | |
| Cost of product sales | | $ | 269 | | | $ | 167 | | | $ | 679 | | | $ | 670 | |
| Cost of services | | | 39 | | | | 48 | | | | 107 | | | | 126 | |
| Selling, general and administrative | | | 3,838 | | | | 4,262 | | | | 11,459 | | | | 13,157 | |
| Research and development | | | 993 | | | | 1,158 | | | | 2,512 | | | | 3,277 | |
| DOLBY LABORATORIES, INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| | | | |
| | September 28, 2007 | | June 27, 2008 |
| | (unaudited)
(in thousands) |
| |
| ASSETS | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 368,467 | | $ | 369,907 |
| Short-term investments | | | 231,217 | | | 49,552 |
| Accounts receivable, net | | | 28,165 | | | 45,933 |
| Inventories | | | 14,883 | | | 22,000 |
| Deferred income taxes | | | 73,686 | | | 85,576 |
| Prepaid expenses and other current assets | | | 17,000 | | | 47,018 |
| Total current assets | | | 733,418 | | | 619,986 |
| | | | | | |
| Property, plant and equipment, net | | | 85,552 | | | 85,775 |
| Intangible assets, net | | | 35,389 | | | 90,751 |
| Goodwill | | | 39,364 | | | 273,552 |
| Long-term investments | | | 73,224 | | | 179,538 |
| Long-term deferred income taxes | | | 12,393 | | | 12,817 |
| Other assets | | | 12,357 | | | 13,188 |
| Total assets | | $ | 991,697 | | $ | 1,275,607 |
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | |
| Current liabilities: | | | | |
| Accounts payable and accrued liabilities | | $ | 119,068 | | $ | 143,312 |
| Income taxes payable | | | 9,051 | | | 2,833 |
| Current portion of long-term debt | | | 1,563 | | | 1,607 |
| Deferred revenue | | | 13,522 | | | 30,894 |
| Total current liabilities | | | 143,204 | | | 178,646 |
| | | | | | |
| Long-term debt | | | 9,691 | | | 8,408 |
| Long-term deferred revenue | | | 5,073 | | | 6,069 |
| Deferred income tax liability | | | - | | | 18,985 |
| Other non-current liabilities | | | 14,294 | | | 29,323 |
| Total liabilities | | | 172,262 | | | 241,431 |
| | | | | | |
| Controlling interest | | | 22,279 | | | 22,699 |
| Stockholders' equity: | | | | |
| Class A common stock | | | 49 | | | 52 |
| Class B common stock | | | 61 | | | 61 |
| Additional paid-in capital | | | 375,830 | | | 424,502 |
| Retained earnings | | | 409,749 | | | 560,936 |
| Accumulated other comprehensive income | | | 11,467 | | | 25,926 |
| Total stockholders' equity | | | 797,156 | | | 1,011,477 |
| Total liabilities and stockholders' equity | | $ | 991,697 | | $ | 1,275,607 |
CONTACT:
Dolby Laboratories
Investors:
Alex Hughes, 415-645-4572
investor@dolby.com
Media:
Jeanne Alford, 415-645-5000
news@dolby.com
