EX-99.1 2 a5461245ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 Dolby Laboratories Reports FY 2007 Third-Quarter Results Third-Quarter Revenue up 28 Percent Year-over-Year SAN FRANCISCO--(BUSINESS WIRE)--Aug. 1, 2007--Dolby Laboratories, Inc. (NYSE:DLB) today announced the Company's financial results for the third quarter of fiscal year 2007. For the third quarter, Dolby reported total revenue of $119.6 million, compared to $93.7 million for the third quarter of fiscal 2006, an increase of 28 percent. Third-quarter net income was $29.7 million, or $0.26 per diluted share, compared to $19.1 million, or $0.17 per diluted share, for the third quarter of fiscal 2006. Net income for the third quarter reflected stock-based compensation expense of $5.1 million compared to $4.7 million in the third quarter of fiscal 2006. "Our third-quarter results demonstrate the strength of Dolby's business model, as we continue to diversify our revenue across newer markets," said Bill Jasper, President and Chief Executive Officer, Dolby Laboratories. "Dolby(R) technology is an essential element in the entertainment experience, and as digital entertainment expands across multiple platforms, Dolby continues to benefit." Guidance For fiscal 2007, Dolby now expects revenue to be approximately $465 million to $475 million. Net income is now expected to be approximately $122 million to $127 million. Consequently, earnings per diluted share are now expected to be approximately $1.07 to $1.11. While 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 $21 million. The Company's Conference Call Information Members of Dolby management will lead a conference call open to all interested parties to discuss Dolby's third-quarter fiscal 2007 financial results at 2 p.m. PT/5 p.m. ET, Wednesday, August 1, 2007. Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm or by dialing 877-704-5381. International callers can access the conference call at 913-312-1295. A replay of the call will be available beginning at 5 p.m. PT on August 1, 2007 until 9 p.m. PT on August 8, 2007 at 888-203-1112 (international callers can access the replay by dialing 719-457-0820) using confirmation code 1983417. An archived version of the teleconference will also be available on Dolby Laboratories' website, www.dolby.com.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 the strength of its business model, the diversification of its revenues across new markets, the expansion of digital entertainment across multiple platforms, Dolby's role as an essential element in the entertainment experience, 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 the markets in which Dolby operates, including the DVD, broadcast, personal computer, gaming, or portable device markets, and trends relating to the development of additional and newer markets for Dolby technologies; 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 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; Dolby's ability to expand its business generally, and to expand its business beyond sound technologies to other technologies related to digital entertainment delivery, by acquiring 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 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. S07/18523 DLB-F DOLBY LABORATORIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Fiscal Quarter Ended Fiscal Year-to-Date Ended -------------------- ------------------------- June 30, June 29, June 30, June 29, 2006 2007 2006 2007 ---------- --------- --------------- --------- (unaudited) (in thousands, except per share amounts) Revenue: Licensing $ 69,138 $ 94,795 $ 221,303 $283,812 Product sales 18,862 17,191 50,574 47,870 Services 5,650 7,627 17,522 21,383 ---------- --------- --------------- --------- Total revenue 93,650 119,613 289,399 353,065 ---------- --------- --------------- --------- Cost of revenue: Cost of licensing 6,008 8,478 19,786 26,287 Cost of product sales(1) 10,190 8,119 29,754 24,519 Cost of services(1) 2,686 2,963 7,913 8,470 ---------- --------- --------------- --------- Total cost of revenue 18,884 19,560 57,453 59,276 ---------- --------- --------------- --------- Gross margin 74,766 100,053 231,946 293,789 ---------- --------- --------------- --------- Operating expenses: Selling, general and administrative(1) 38,477 48,430 113,598 128,266 Research and development(1) 9,108 11,854 25,413 31,650 Gain on settlements - (350) - (1,850) ---------- --------- --------------- --------- Total operating expenses 47,585 59,934 139,011 158,066 ---------- --------- --------------- --------- Operating income 27,181 40,119 92,935 135,723 Other income, net 4,020 5,759 12,313 17,118 ---------- --------- --------------- --------- Income before provision for income taxes and controlling interest 31,201 45,878 105,248 152,841 Provision for income taxes 11,778 15,839 39,916 53,067 ---------- --------- --------------- --------- Income before controlling interest 19,423 30,039 65,332 99,774 Controlling interest in net income (339) (354) (1,000) (1,101) ---------- --------- --------------- --------- Net income $ 19,084 $ 29,685 $ 64,332 $ 98,673 ========== ========= =============== ========= Basic earnings per share $ 0.18 $ 0.27 $ 0.61 $ 0.91 Diluted earnings per share $ 0.17 $ 0.26 $ 0.58 $ 0.87 Weighted-average shares outstanding (basic) 106,238 109,692 105,262 108,898 Weighted-average shares outstanding (diluted) 111,983 113,696 111,446 113,389 (1) Stock-based compensation included above was classified as follows: Cost of product sales $ 201 $ 269 $ 599 $ 679 Cost of services 129 39 385 107 Selling, general and administrative 3,731 3,838 11,941 11,459 Research and development 679 993 2,015 2,512 DOLBY LABORATORIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 29, June 29, 2006 2007 ------------- -------- (unaudited) (in thousands) ASSETS Current assets: Cash and cash equivalents $ 363,537 $325,909 Short-term investments 122,162 210,548 Accounts receivable, net 23,550 25,021 Inventories 11,104 14,091 Income tax receivable 1,371 20,875 Deferred income taxes 44,568 57,831 Prepaid expenses and other current assets 6,340 13,819 ------------- -------- Total current assets 572,632 668,094 Property, plant and equipment, net 76,995 81,457 Intangible assets, net 14,954 33,028 Goodwill 23,188 41,908 Long-term investments 32,909 80,047 Long-term deferred income taxes 11,100 11,015 Other assets 7,510 8,151 ------------- -------- Total assets $ 739,288 $923,700 ============= ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 79,336 $103,223 Income taxes payable 5,719 6,233 Current portion of debt 1,441 1,528 Deferred revenue 6,358 11,927 ------------- -------- Total current liabilities 92,854 122,911 Long-term debt 10,893 10,037 Long-term deferred tax liability - 6,312 Long-term deferred revenue 4,563 5,072 Other non-current liabilities 16,779 14,274 ------------- -------- Total liabilities 125,089 158,606 Controlling interest 19,911 21,825 Stockholders' equity: Class A common stock 37 49 Class B common stock 70 61 Additional paid-in capital 323,449 365,907 Retained earnings 266,918 365,591 Accumulated other comprehensive income 3,814 11,661 ------------- -------- Total stockholders' equity 594,288 743,269 ------------- -------- Total liabilities and stockholders' equity $ 739,288 $923,700 ============= ======== CONTACT: Dolby Laboratories Alex Hughes, 415-645-4572 (Investor) investor@dolby.com Paula Dunn, 415-645-5000 (Media) news@dolby.com