-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, R488B1TH5TAYXCVchdWLPjrqQac70Ojyrze6r8HkLDLvZTKeZwBMQyOpZi3OmNaq eZOdC4Are5Wxq/Ywdb/uSQ== 0001157523-06-011135.txt : 20061109 0001157523-06-011135.hdr.sgml : 20061109 20061109160746 ACCESSION NUMBER: 0001157523-06-011135 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061109 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061109 DATE AS OF CHANGE: 20061109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Dolby Laboratories, Inc. CENTRAL INDEX KEY: 0001308547 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 900199783 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32431 FILM NUMBER: 061202271 BUSINESS ADDRESS: STREET 1: 100 POTRERO AVENUE CITY: SAN FRANCISCO STATE: CA ZIP: 94103 BUSINESS PHONE: 415 558 0200 MAIL ADDRESS: STREET 1: 100 POTRERO AVENUE CITY: SAN FRANCISCO STATE: CA ZIP: 94103 8-K 1 a5270488.txt DOLBY LABORATORIES, INC. 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 9, 2006 ------------------------ DOLBY LABORATORIES, INC. (Exact name of registrant as specified in its charter) Delaware 001-32431 90-0199783 -------- --------- ---------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 100 Potrero Avenue San Francisco, CA 94103-4813 (Address of principal executive offices) (Zip Code) (415) 558-0200 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ Section 2 - Financial Information ITEM 2.02 Results of Operations and Financial Condition. The following information is intended to be furnished under Item 2.02 of Form 8-K, "Results of Operations and Financial Condition." This information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. On November 9, 2006, Dolby Laboratories, Inc. issued a press release announcing its financial results for its fiscal quarter and fiscal year ended September 29, 2006. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Section 9 - Financial Statements and Exhibits ITEM 9.01 Financial Statements and Exhibits. (d) Exhibits. The following exhibit is furnished herewith: Exhibit No. Description - ----------- ----------- 99.1 Press Release of Dolby Laboratories, Inc. dated November 9, 2006 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DOLBY LABORATORIES, INC. By: /s/ Kevin J. Yeaman ---------------------------------- Kevin J. Yeaman Chief Financial Officer Date: November 9, 2006 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press Release of Dolby Laboratories, Inc. dated November 9, 2006 EX-99.1 2 a5270488ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Dolby Laboratories Reports FY 2006 Fourth Quarter and Year-End Results Fiscal 2006 Revenue Grows 19 Percent Year-Over-Year SAN FRANCISCO--(BUSINESS WIRE)--Nov. 9, 2006--Dolby Laboratories, Inc. (NYSE:DLB) today announced the Company's financial results for the fourth quarter and fiscal year ended September 29, 2006. For the fourth quarter, Dolby reported total revenue of $102.1 million, compared to $78.9 million for the fourth quarter of fiscal 2005, an increase of 29 percent. Fourth quarter net income was $25.2 million, or $0.22 per diluted share, compared to $16.8 million, or $0.15 per diluted share, for the fourth quarter of fiscal 2005. For fiscal year 2006, Dolby reported total revenue of $391.5 million, compared to $328.0 million for fiscal year 2005. Net income for fiscal year 2006 was $89.5 million, or $0.80 per diluted share, compared to $52.3 million, or $0.50 per diluted share, for fiscal year 2005. Net income for the fourth quarter of fiscal 2006 reflected stock-based compensation expense of $4.2 million compared to $2.7 million for the fourth quarter of fiscal 2005. Net income for fiscal 2006 reflected $19.1 million of stock-based compensation expense, compared with $14.2 million for fiscal 2005. In connection with the Company's IPO, Ray Dolby contributed to the Company all of his intellectual property rights related to the Company's business, which he had previously licensed to the Company in exchange for royalty payments. As a result of the contribution, the Company's royalty payments to Ray Dolby terminated in February 2005. Consequently, net income for fiscal 2006 did not include any royalty payments to Ray Dolby, while net income for fiscal 2005 reflected $11.1 million of royalty payments to Ray Dolby, net of taxes. Pro forma net income, which excludes these royalty payments, was $89.5 million, or $0.80 per diluted share, for the 2006 fiscal year, compared to $63.4 million, or $0.61 per diluted share, for fiscal 2005. In its third quarter fiscal 2006 report on Form 10-Q, Dolby disclosed that approximately $10 million in royalties were expected from two existing licensees and that the Company would not recognize this estimated revenue until resolution of certain contractual matters with the licensees. In the fourth quarter of fiscal 2006, the Company resolved the contractual matters with one of the licensees and recognized revenue of $6.7 million related to prior quarters. "We saw good growth for our core technologies in fiscal 2006, and we now go into fiscal 2007 focused on extending these technologies across additional markets, driving the adoption of newer Dolby technologies, and capitalizing on the Dolby brand, reputation, and business model to generate additional long-term growth opportunities," said Bill Jasper, President and Chief Executive Officer of Dolby. Guidance For fiscal 2007, revenue is currently expected to be $420 million to $450 million. Net income is expected to be $95 million to $105 million. Earnings per diluted share are expected to be $0.83 to $0.92. While under FAS 123R, stock-based compensation expense may vary based on factors such as stock price or volatility, Dolby currently expects stock-based compensation expense for the full year to be $20 million to $22 million. Pro Forma Information Prior to the Company's IPO in February of 2005, Ray Dolby retained ownership of the intellectual property he created related to the Company's business and licensed those rights to the Company in exchange for royalty payments. In connection with the Company's IPO, Ray Dolby contributed to the Company all of these intellectual property rights. The pro forma financial information included in this release gives effect to the asset contribution as though such transactions had been completed prior to the beginning of fiscal 2005. Specifically, the Company provides net income and earnings per diluted share excluding royalties paid to Ray Dolby. The Company believes these are important metrics as they represent profitability exclusive of the charges that have now been eliminated. The Company uses these metrics internally to measure its performance and believes these metrics may be meaningful for investors in analyzing the Company's results of operations. A reconciliation of the Company's actual results to these additional metrics is included in this release. The Company's Conference Call Information Members of Dolby management will lead a conference call open to all interested parties to discuss Dolby Laboratories' fourth quarter and fiscal 2006 financial results at 2:00 p.m. PT/5:00 p.m. ET, Thursday, November 9, 2006. Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm or by dialing 800-289-0493. International callers can access the conference call at 913-981-5510. A replay of the call will be available beginning at 5:00 p.m. PT on November 9, 2006 until 9 p.m. PT on November 16, 2006, at 888-203-1112 (international callers can access the replay by dialing 719-457-0820) and entering confirmation code 5722471. 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, and stock-based compensation expense for the fiscal year ending September 28, 2007 and Dolby's expectations concerning extending its technologies into additional markets and driving the adoption of newer Dolby(R) technologies, and the benefits, 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 DVD markets; pricing pressures; the development of the markets for PCs, broadcast, gaming, automotive, and AAC-based music device products that incorporate Dolby's technologies; 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 that have historically limited recognition and enforcement of intellectual property and contractual rights; risks associated with the health of the motion picture industry generally; the development and growth of the market for digital cinema and Dolby's ability to successfully penetrate this market; 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 Annual Report on Form 10-K and 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 that make the entertainment experience more realistic and immersive. For 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. Based in San Francisco with European headquarters in England, the Company has entertainment industry liaison offices in New York and Los Angeles, and licensing liaison offices in London, Shanghai, Beijing, Hong Kong, and Tokyo. 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. S06/17683 DLB-F DOLBY LABORATORIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Fiscal Quarter Ended Fiscal Year Ended -------------------- ------------------- September September September September 30, 2005 29, 2006 30, 2005 29, 2006 ---------- --------- --------- --------- (unaudited) (in thousands, except per share amounts) Revenue: Licensing $ 58,615 $ 80,360 $246,298 $301,663 Product sales 15,241 14,839 60,021 65,413 Production services 5,068 6,944 21,648 24,466 - -------------------------------------------------- ------------------- Total revenue 78,924 102,143 327,967 391,542 - -------------------------------------------------- ------------------- Cost of revenue: Cost of licensing 5,191 7,101 40,558 26,887 Cost of product sales (1) 8,143 8,733 31,181 38,487 Cost of production services (1) 2,037 2,755 8,479 10,668 - -------------------------------------------------- ------------------- Total cost of revenue 15,371 18,589 80,218 76,042 - -------------------------------------------------- ------------------- Gross margin 63,553 83,554 247,749 315,500 - -------------------------------------------------- ------------------- Selling, general and administrative (1) 33,316 40,567 135,155 154,165 Research and development (1) 7,618 9,964 30,532 35,377 Gain on settlements - (3,625) (2,000) (3,625) - -------------------------------------------------- ------------------- Total operating expenses 40,934 46,906 163,687 185,917 - -------------------------------------------------- ------------------- Operating income 22,619 36,648 84,062 129,583 Other income, net 4,056 4,741 7,156 17,054 - -------------------------------------------------- ------------------- Income before provision for income taxes and controlling interest 26,675 41,389 91,218 146,637 Provision for income taxes 9,255 15,917 37,330 55,833 - -------------------------------------------------- ------------------- Income before controlling interest 17,420 25,472 53,888 90,804 Controlling interest in net income (612) (255) (1,595) (1,255) - -------------------------------------------------- ------------------- Net income $ 16,808 $ 25,217 $ 52,293 $ 89,549 ================================================== =================== Basic earnings per share $ 0.16 $ 0.24 $ 0.54 $ 0.85 Diluted earnings per share $ 0.15 $ 0.22 $ 0.50 $ 0.80 - -------------------------------------------------- ------------------- Basic shares outstanding 103,655 106,964 96,969 105,688 Diluted shares outstanding 110,499 112,150 104,220 111,658 - -------------------------------------------------- ------------------- (1) Stock-based compensation included in net income above was as follows: Cost of product sales $ 56 $ 201 $ 222 $ 800 Cost of production services 20 128 103 513 Selling, general and administrative 2,245 3,146 11,709 15,087 Research and development 428 723 2,150 2,738 - -------------------------------------------------- ------------------- Total stock-based compensation $ 2,749 $ 4,198 $ 14,184 $ 19,138 ================================================== =================== DOLBY LABORATORIES, INC. CONSOLIDATED BALANCE SHEETS September September 30, 2005 29, 2006 --------- ----------- (unaudited) (in thousands) ASSETS Current assets: Cash and cash equivalents $372,403 $412,487 Short-term investments - 73,212 Restricted cash 205 210 Accounts receivable, net 25,221 23,550 Inventories 11,722 11,104 Income tax receivable 8,021 8,956 Deferred income taxes 31,183 44,568 Prepaid expenses and other current assets 5,433 6,130 - ---------------------------------------------------------------------- Total current assets 454,188 580,217 Property, plant and equipment, net 76,462 76,995 Intangible assets, net 17,184 14,954 Goodwill 23,865 23,188 Long-term investments - 32,909 Long-term deferred income taxes 6,781 11,100 Other assets 7,797 7,510 - ---------------------------------------------------------------------- Total assets $586,277 $746,873 ====================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 65,126 $ 79,336 Income taxes payable 3,054 13,304 Current portion of debt 1,346 1,441 Deferred revenue 3,268 6,358 - ---------------------------------------------------------------------- Total current liabilities 72,794 100,439 Long-term debt 12,124 10,893 Other non-current liabilities 21,956 21,342 - ---------------------------------------------------------------------- Total liabilities 106,874 132,674 Controlling interest 18,264 19,911 Stockholders' equity: Class A common stock 33 37 Class B common stock 71 70 Additional paid-in capital 308,354 323,449 Deferred stock-based compensation (26,422) - Retained earnings 177,369 266,918 Accumulated other comprehensive income 1,734 3,814 - ---------------------------------------------------------------------- Total stockholders' equity 461,139 594,288 - ---------------------------------------------------------------------- Total liabilities and stockholders' equity $586,277 $746,873 ====================================================================== DOLBY LABORATORIES, INC. RECONCILIATION OF PRO FORMA NET INCOME TO ACTUAL NET INCOME Fiscal Quarter Ended Fiscal Year Ended - -------------------------------------------------- ------------------- September September September September 30, 2005 29, 2006 30, 2005 29, 2006 --------- --------- --------- --------- (unaudited) (in thousands, except per share amounts) Net income $ 16,808 $ 25,217 $ 52,293 $ 89,549 Add: Royalties payable to Ray Dolby (net of taxes) - - 11,123 - - -------------------------------------------------- ------------------- Pro forma net income $ 16,808 $ 25,217 $ 63,416 $ 89,549 ================================================== =================== Basic shares outstanding 103,655 106,964 96,969 105,688 Diluted shares outstanding 110,499 112,150 104,220 111,658 - -------------------------------------------------- ------------------- Basic net income per share $ 0.16 $ 0.24 $ 0.54 $ 0.85 Diluted net income per share $ 0.15 $ 0.22 $ 0.50 $ 0.80 - -------------------------------------------------- ------------------- Basic pro forma net income per share $ 0.16 $ 0.24 $ 0.65 $ 0.85 Diluted pro forma net income per share $ 0.15 $ 0.22 $ 0.61 $ 0.80 - -------------------------------------------------- ------------------- CONTACT: Dolby Laboratories Alex Hughes, Investor Relations, 415-645-4572 (Investors) investor@dolby.com Paula Dunn, Corporate Communications, 415-645-5000 (Media) news@dolby.com -----END PRIVACY-ENHANCED MESSAGE-----