Dolby Laboratories Reports Fourth Quarter and Fiscal 2017 Financial Results

SAN FRANCISCO--(BUSINESS WIRE)-- Dolby Laboratories, Inc. (NYSE: DLB) today announced financial results for the fourth quarter (Q4) and fiscal year that ended September 29, 2017. For Q4, Dolby reported total revenue of $242.0 million, compared to $233.0 million for Q4 of fiscal 2016. For fiscal 2017, Dolby reported total revenue of $1.08 billion, compared to $1.03 billion for fiscal 2016.

We continued to build momentum with our new initiatives in Q4, said Kevin Yeaman, President and CEO of Dolby Laboratories. With increased adoption of Dolby Vision in televisions and mobile devices, a growing number of Dolby Cinema locations open, and Dolby Voice now launched into the huddle room market, we are well positioned to bring our experiences to significantly more consumers in 2018.

Fourth quarter GAAP net income was $21.8 million, or $0.21 per diluted share, compared to $23.9 million, or $0.23 per diluted share, for the fourth quarter of fiscal 2016. On a non-GAAP basis, fourth quarter net income was $46.6 million, or $0.45 per diluted share, compared to $38.6 million, or $0.37 per diluted share, for the fourth quarter of fiscal 2016. Dolbys non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.

During Q4, Dolby initiated a plan to reduce certain activities and reallocate those resources towards higher priority investment areas, resulting in the elimination of approximately 80 employee positions. As a result, Dolbys Q4 operating expenses on a GAAP basis include a $12.9 million restructuring charge for severance-related costs associated with this action.

Fiscal 2017 GAAP net income was $201.8 million, or $1.95 per diluted share, compared to $185.9 million, or $1.81 per diluted share, for fiscal 2016. On a non-GAAP basis, fiscal 2017 net income was $269.7 million, or $2.61 per diluted share, compared to $249.0 million, or $2.43 per diluted share, for fiscal 2016.

Dividend

Today, Dolby announced a cash dividend of $0.16 per share of Class A and Class B common stock, payable on November 15, 2017, to stockholders of record as of the close of business on November 6, 2017.

Financial Outlook

Q1 Fiscal 2018

Dolby is providing the following estimates for its first quarter (Q1) of fiscal 2018:

Total revenue will range from $260 million to $270 million

Gross margin percentages will be approximately 88 percent on a GAAP basis, and approximately 89 percent on a non-GAAP basis

Operating expenses will range from $174 million to $178 million on a GAAP basis, and from $156 million to $160 million on a non-GAAP basis

Diluted earnings per share will be between $0.41 and $0.47 on a GAAP basis, and between $0.55 and $0.61 on a non-GAAP basis

Effective tax rate will be between 23 percent and 24 percent on both a GAAP and non-GAAP basis

Fiscal 2018

Dolby is providing the following estimates for its fiscal 2018:

Total revenue will range from $1.14 billion to $1.17 billion

Gross margin percentages will be approximately 88 percent on a GAAP basis, and approximately 89 percent on a non-GAAP basis

Operating expenses will range from $726 million to $736 million on a GAAP basis, and from $655 million to $665 million on a non-GAAP basis

Effective tax rate will be between 23 percent and 24 percent on both a GAAP and non-GAAP basis

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss Q4 and fiscal 2017 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Wednesday, October 25, 2017.

Access to the teleconference will be available over the Internet from http://investor.dolby.com/events.cfm or by dialing 1-888-395-3186. International callers can access the conference call at 1-719-325-2168.

A replay of the call will be available from 5:00 p.m. PT on Wednesday, October 25, 2017, until 9:00 p.m. PT on Wednesday, November 1, 2017, by dialing 1-844-512-2921 (international callers can access the replay by dialing 1-412-317-6671) and entering the confirmation code 6807869. An archived version of the teleconference will also be available on the Dolby Laboratories website, http://investor.dolby.com/events.cfm.

Non-GAAP Financial Information

To supplement Dolbys financial statements presented on a GAAP basis, Dolby provides certain non-GAAP financial measures to provide investors with an additional tool to evaluate Dolbys operating results in a manner that focuses on what Dolbys management believes to be its ongoing business operations. Specifically, we exclude the following as adjustments from one or more of our non-GAAP financial measures:

Stock-based compensation expense: Stock-based compensation, unlike cash-based compensation, utilizes subjective and sometimes complex assumptions in the methodologies used to value the various stock-based award types that we grant. These assumptions may differ from those used by other companies. To facilitate more meaningful comparisons between our underlying operating results and those of other companies, we exclude stock-based compensation expense.

Expense associated with dividend equivalents paid on restricted stock units: In connection with a special dividend declared in the first quarter of fiscal 2013, we modified restricted stock units (RSUs) that were unvested at that time to preserve their pre-cash dividend economic value. The special dividend was a discrete and infrequent event that is not representative of our normal operating activities; therefore, we exclude the compensation cost related to the dividend equivalents to provide a more accurate view of our underlying operating results.

Amortization of acquisition-related intangibles: We amortize intangible assets acquired in connection with acquisitions. These intangible assets consist of patents and technology, customer relationships, and

LINK:	http://investor.dolby.com/releasedetail.cfm?ReleaseID=1045423...
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