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Edited press release follows:
Dolby Laboratories Reports First Quarter 2011 Results
SAN FRANCISCO–Dolby Laboratories, Inc. (NYSE: DLB) today announced the Company’s financial results for its first quarter of fiscal 2011.
For the first quarter, Dolby reported total revenue of $242.7 million, compared to $221.2 million for the first quarter of fiscal 2010.
First quarter GAAP net income was $86.4 million, or $0.76 per diluted share, compared to $69.1 million, or $0.59 per diluted share, for the first quarter of fiscal 2010. On a non-GAAP basis, first quarter net income was $85.0 million, or $0.75 per diluted share, compared to $74.3 million, or $0.64 per diluted share, for the first quarter of fiscal 2010. First quarter fiscal 2011 GAAP net income benefited from various discrete tax items, primarily a one-time tax benefit resulting from the release of a deferred tax liability of $11.0 million related to the amortization of an intangible from a prior acquisition.
Dolby’s non-GAAP measures exclude expenses related to stock-based compensation, the amortization of intangibles from business combinations, restructuring charges, and the related tax impact of these items. The non-GAAP measures also exclude the one-time tax benefit resulting from the release of the deferred tax liability.
“During the first quarter, we generated double-digit revenue growth in many of our licensing markets,” said Kevin Yeaman, President and Chief Executive Officer, Dolby Laboratories, “and we remain well positioned for growth in the number of entertainment devices. In the near term, we have revised our fiscal 2011 outlook to reflect a slowdown in our PC market.”
For fiscal 2011, Dolby is now targeting revenue of $930 million to $970 million, while it continues to target total gross margin of approximately 88 percent on a GAAP basis, and approximately 89 percent on a non-GAAP basis. In addition, on a GAAP basis, Dolby is now targeting fiscal 2011 operating expense of $406 million to $418 million, other income of approximately $5 to $6 million, and a tax rate of approximately 30 percent, while it continues to target diluted shares outstanding of approximately 114 million. On a non-GAAP basis, Dolby is now targeting fiscal 2011 operating expense of $355 million to $365 million and other income of approximately $5 to $6 million, while it continues to target a tax rate of approximately 33 percent, and diluted shares outstanding of approximately 114 million. Dolby’s non-GAAP targets exclude expenses related to stock-based compensation, the amortization of intangibles from business combinations, restructuring charges, and the related tax impact of these items. The non-GAAP measures also exclude the one-time tax benefit resulting from the release of the deferred tax liability. While stock-based compensation expense may vary based on factors such as stock price or volatility, Dolby continues to target stock-based compensation expense for fiscal 2011 of approximately $47 to $48 million. In addition, Dolby continues to target charges related to the amortization of acquired intangibles for fiscal 2011 of approximately $13 million and restructuring charges of approximately $1 to $2 million. These targets lead to an updated fiscal 2011 diluted earnings per share target range of $2.57 to $2.73 on a GAAP basis and $2.82 to $2.98 on a non-GAAP basis.
The Company’s Conference Call Information
Members of Dolby management will lead a conference call open to all interested parties to discuss Dolby Laboratories’ Q1 2011 fiscal year financial results at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, February 3, 2011.
Access to the teleconference will be available over the Internet from http://investor.dolby.com/medialist.cfm or by dialing 877-879-6174. International callers can access the conference call at 719-325-4814.
A replay of the call will be available from 5:00 p.m. PT on Thursday, February 3, 2011, until 9:00 p.m. PT on February 10, 2011 by dialing 877-870-5176 (international callers can access the replay by dialing 858-384-5517) and entering the confirmation code 3844594. An archived version of the teleconference will also be available on www.dolby.com.
Non-GAAP Financial Information
To supplement Dolby’s financial statements presented on a GAAP basis, Dolby provides non-GAAP financial measures of gross margin, operating expense, tax rate, and diluted earnings per share. These measures are adjusted to exclude the charges and expenses discussed above. Dolby presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Dolby’s operating results in a manner that focuses on what Dolby’s management believes to be its ongoing business operations. Dolby’s management believes it is useful for itself and investors to review, as applicable, both GAAP information that includes the impact of stock-based compensation expense, amortization of acquired intangible assets through business combinations, restructuring charges, and the related tax impact of all of these items on the provision for income taxes, and the non-GAAP measures that exclude such information in order to assess the performance of Dolby’s business for planning and forecasting in subsequent periods. Dolby’s management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Whenever Dolby uses such a non-GAAP financial measure, it provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed above. Investors are also encouraged to review Dolby’s GAAP financial statements as reported in its SEC filings. A reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release and at http://investor.dolby.com/medialist.cfm.
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 creates innovations that enrich entertainment at the movies, at home, or on the go. For more information about Dolby Laboratories or Dolby® technologies, please visit www.dolby.com.