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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
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90-0199783
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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100 Potrero Avenue
San Francisco, CA
|
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94103-4813
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(Address of principal executive offices)
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(Zip Code)
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Item 1.
|
||
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Item 2.
|
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Item 3.
|
||
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Item 4.
|
||
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Item 1.
|
||
|
|
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Item 1A.
|
||
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Item 2.
|
||
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Item 6.
|
||
|
|
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|
September 30,
2011 |
March 30,
2012 |
||||
ASSETS
|
(unaudited)
|
|||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
551,512
|
|
$
|
747,988
|
|
Short-term investments
|
391,281
|
|
350,735
|
|
||
Accounts receivable, net of allowance of $2,466 at September 30, 2011 and $2,098 at March 30, 2012
|
61,815
|
|
57,762
|
|
||
Inventories
|
26,244
|
|
16,562
|
|
||
Deferred taxes
|
90,869
|
|
94,859
|
|
||
Prepaid expenses and other current assets
|
36,877
|
|
26,099
|
|
||
Total current assets
|
1,158,598
|
|
1,294,005
|
|
||
Long-term investments
|
272,797
|
|
209,804
|
|
||
Property, plant and equipment, net
|
117,107
|
|
135,517
|
|
||
Intangible assets, net
|
51,573
|
|
44,816
|
|
||
Goodwill
|
263,260
|
|
264,750
|
|
||
Deferred taxes
|
14,779
|
|
20,337
|
|
||
Other non-current assets
|
6,273
|
|
16,171
|
|
||
Total assets
|
$
|
1,884,387
|
|
$
|
1,985,400
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
||||
Current liabilities:
|
|
|
||||
Accounts payable
|
$
|
10,887
|
|
$
|
5,444
|
|
Accrued liabilities
|
117,035
|
|
108,245
|
|
||
Income taxes payable
|
4,762
|
|
9,391
|
|
||
Deferred revenue
|
26,701
|
|
26,718
|
|
||
Total current liabilities
|
159,385
|
|
149,798
|
|
||
Long-term deferred revenue
|
15,526
|
|
16,332
|
|
||
Deferred taxes
|
671
|
|
658
|
|
||
Other non-current liabilities
|
23,455
|
|
31,445
|
|
||
Total liabilities
|
199,037
|
|
198,233
|
|
||
Stockholders’ equity:
|
|
|
||||
Class A common stock, $0.001 par value, one vote per share, 500,000,000 shares authorized: 51,860,546 shares issued and outstanding at September 30, 2011 and 50,284,419 at March 30, 2012
|
52
|
|
50
|
|
||
Class B common stock, $0.001 par value, ten votes per share, 500,000,000 shares authorized: 57,559,554 shares issued and outstanding at September 30, 2011 and 57,183,964 at March 30, 2012
|
58
|
|
57
|
|
||
Additional paid-in capital
|
210,681
|
|
149,082
|
|
||
Retained earnings
|
1,445,189
|
|
1,606,468
|
|
||
Accumulated other comprehensive income
|
7,533
|
|
9,130
|
|
||
Total stockholders’ equity – Dolby Laboratories, Inc.
|
1,663,513
|
|
1,764,787
|
|
||
Controlling interest
|
21,837
|
|
22,380
|
|
||
Total stockholders’ equity
|
1,685,350
|
|
1,787,167
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,884,387
|
|
$
|
1,985,400
|
|
|
Fiscal Quarter Ended
|
Fiscal Year-to-Date Ended
|
||||||||||
|
April 1,
2011 |
March 30,
2012 |
April 1,
2011 |
March 30,
2012 |
||||||||
Revenue:
|
(unaudited)
|
|||||||||||
Licensing
|
$
|
214,627
|
|
$
|
225,349
|
|
$
|
402,803
|
|
$
|
424,973
|
|
Products
|
26,347
|
|
27,228
|
|
72,374
|
|
53,628
|
|
||||
Services
|
9,052
|
|
7,682
|
|
17,561
|
|
15,036
|
|
||||
Total revenue
|
250,026
|
|
260,259
|
|
492,738
|
|
493,637
|
|
||||
Cost of revenue:
|
|
|
|
|
||||||||
Cost of licensing
|
5,771
|
|
3,303
|
|
9,732
|
|
6,631
|
|
||||
Cost of products
|
20,031
|
|
17,635
|
|
42,229
|
|
31,523
|
|
||||
Cost of services
|
2,655
|
|
2,654
|
|
5,635
|
|
5,848
|
|
||||
Total cost of revenue
|
28,457
|
|
23,592
|
|
57,596
|
|
44,002
|
|
||||
Gross margin
|
221,569
|
|
236,667
|
|
435,142
|
|
449,635
|
|
||||
Operating expenses:
|
|
|
|
|
||||||||
Research and development
|
28,399
|
|
34,236
|
|
56,726
|
|
67,062
|
|
||||
Sales and marketing
|
37,545
|
|
43,194
|
|
75,762
|
|
86,210
|
|
||||
General and administrative
|
35,155
|
|
37,281
|
|
72,197
|
|
72,746
|
|
||||
Restructuring charges, net
|
—
|
|
910
|
|
785
|
|
1,278
|
|
||||
Total operating expenses
|
101,099
|
|
115,621
|
|
205,470
|
|
227,296
|
|
||||
Operating income
|
120,470
|
|
121,046
|
|
229,672
|
|
222,339
|
|
||||
Interest income
|
1,953
|
|
1,414
|
|
3,567
|
|
3,151
|
|
||||
Interest expense
|
(85
|
)
|
(5
|
)
|
(368
|
)
|
(31
|
)
|
||||
Other income, net
|
156
|
|
60
|
|
689
|
|
260
|
|
||||
Income before provision for income taxes
|
122,494
|
|
122,515
|
|
233,560
|
|
225,719
|
|
||||
Provision for income taxes
|
(40,012
|
)
|
(34,198
|
)
|
(64,313
|
)
|
(64,036
|
)
|
||||
Net income including controlling interest
|
82,482
|
|
88,317
|
|
169,247
|
|
161,683
|
|
||||
Less: net income attributable to controlling interest
|
(421
|
)
|
(197
|
)
|
(799
|
)
|
(404
|
)
|
||||
Net income attributable to Dolby Laboratories, Inc.
|
$
|
82,061
|
|
$
|
88,120
|
|
$
|
168,448
|
|
$
|
161,279
|
|
Earnings per share attributable to Dolby Laboratories, Inc.:
|
|
|
|
|
||||||||
Basic
|
$
|
0.73
|
|
$
|
0.81
|
|
$
|
1.50
|
|
$
|
1.48
|
|
Diluted
|
$
|
0.72
|
|
$
|
0.81
|
|
$
|
1.48
|
|
$
|
1.48
|
|
Weighted-average shares outstanding:
|
|
|
|
|
||||||||
Basic
|
112,140
|
|
108,415
|
|
112,086
|
|
108,650
|
|
||||
Diluted
|
113,346
|
|
109,170
|
|
113,535
|
|
109,242
|
|
||||
Related party rent expense included in general and administrative expenses
|
$
|
343
|
|
$
|
343
|
|
$
|
686
|
|
$
|
686
|
|
|
Fiscal Year-to-Date Ended
|
|||||
|
April 1,
2011 |
March 30,
2012 |
||||
Operating activities:
|
(unaudited)
|
|||||
Net income including controlling interest
|
$
|
169,247
|
|
$
|
161,683
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||
Depreciation and amortization
|
21,045
|
|
20,103
|
|
||
Stock-based compensation
|
22,000
|
|
23,502
|
|
||
Amortization of premium on investments
|
7,805
|
|
9,306
|
|
||
Excess tax benefit from exercise of stock options
|
(11,305
|
)
|
(425
|
)
|
||
Provision for doubtful accounts
|
856
|
|
132
|
|
||
Deferred income taxes
|
(472
|
)
|
(10,030
|
)
|
||
Other non-cash items affecting net income
|
157
|
|
2,237
|
|
||
Changes in operating assets and liabilities:
|
|
|
||||
Accounts receivable
|
(20,218
|
)
|
4,103
|
|
||
Inventories
|
(3,038
|
)
|
876
|
|
||
Prepaid expenses and other assets
|
(3,715
|
)
|
(1,128
|
)
|
||
Accounts payable and other liabilities
|
(13,379
|
)
|
(10,634
|
)
|
||
Income taxes, net
|
620
|
|
14,108
|
|
||
Deferred revenue
|
1,988
|
|
836
|
|
||
Net cash provided by operating activities
|
171,591
|
|
214,669
|
|
||
Investing activities:
|
|
|
||||
Purchases of available-for-sale securities
|
(368,007
|
)
|
(122,249
|
)
|
||
Proceeds from sales of available-for-sale securities
|
115,462
|
|
105,454
|
|
||
Proceeds from maturities of available-for-sale securities
|
122,914
|
|
111,515
|
|
||
Purchases of property, plant and equipment
|
(19,551
|
)
|
(30,450
|
)
|
||
Acquisitions, net of cash acquired
|
(3,350
|
)
|
(575
|
)
|
||
Proceeds from sales of property, plant and equipment and assets held for sale
|
2,797
|
|
715
|
|
||
Net cash provided by/(used in) investing activities
|
(149,735
|
)
|
64,410
|
|
||
Financing activities:
|
|
|
||||
Proceeds from issuance of common stock, net of shares withheld for taxes
|
15,215
|
|
3,524
|
|
||
Repurchase of common stock
|
(75,124
|
)
|
(86,149
|
)
|
||
Excess tax benefit from exercise of stock options
|
11,305
|
|
425
|
|
||
Net cash used in financing activities
|
(48,604
|
)
|
(82,200
|
)
|
||
Effect of foreign exchange rate changes on cash and cash equivalents
|
1,155
|
|
(403
|
)
|
||
Net increase/(decrease) in cash and cash equivalents
|
(25,593
|
)
|
196,476
|
|
||
Cash and cash equivalents at beginning of period
|
545,861
|
|
551,512
|
|
||
Cash and cash equivalents at end of period
|
$
|
520,268
|
|
$
|
747,988
|
|
Supplemental disclosure:
|
|
|
||||
Cash paid for income taxes
|
$
|
64,019
|
|
$
|
59,997
|
|
Cash paid for interest
|
205
|
|
4
|
|
|
September 30,
2011 |
March 30,
2012 |
||||
|
(in thousands)
|
|||||
Cash and cash equivalents:
|
|
|
||||
Cash
|
$
|
394,474
|
|
$
|
483,622
|
|
Cash equivalents:
|
|
|
||||
Money market funds
|
142,038
|
|
264,366
|
|
||
U.S. agency securities
|
15,000
|
|
—
|
|
||
Total cash and cash equivalents
|
551,512
|
|
747,988
|
|
||
Short-term investments:
|
|
|
||||
Commercial paper
|
—
|
|
20,984
|
|
||
Corporate bonds
|
52,645
|
|
49,885
|
|
||
Municipal debt securities
|
330,562
|
|
274,853
|
|
||
U.S. agency securities
|
8,074
|
|
5,013
|
|
||
Total short-term investments
|
391,281
|
|
350,735
|
|
||
Long-term investments:
|
|
|
||||
Corporate bonds
|
124,313
|
|
75,207
|
|
||
Municipal debt securities
|
141,639
|
|
114,518
|
|
||
U.S. agency securities
|
6,845
|
|
20,079
|
|
||
Total long-term investments
|
272,797
|
|
209,804
|
|
||
Total cash, cash equivalents, and investments
|
$
|
1,215,590
|
|
$
|
1,308,527
|
|
|
September 30, 2011
|
|||||||||||
|
Amortized Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated Fair
Value
|
||||||||
|
(in thousands)
|
|||||||||||
Money market funds
|
$
|
142,038
|
|
$
|
—
|
|
$
|
—
|
|
$
|
142,038
|
|
U.S. agency securities
|
29,858
|
|
65
|
|
(4
|
)
|
29,919
|
|
||||
Corporate bonds
|
177,129
|
|
316
|
|
(487
|
)
|
176,958
|
|
||||
Municipal debt securities
|
471,005
|
|
1,251
|
|
(55
|
)
|
472,201
|
|
||||
Cash equivalents and investments
|
$
|
820,030
|
|
$
|
1,632
|
|
$
|
(546
|
)
|
$
|
821,116
|
|
|
March 30, 2012
|
|||||||||||
|
Amortized Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
Estimated Fair
Value
|
||||||||
|
(in thousands)
|
|||||||||||
Money market funds
|
$
|
264,366
|
|
$
|
—
|
|
$
|
—
|
|
$
|
264,366
|
|
U.S. agency securities
|
25,054
|
|
38
|
|
—
|
|
25,092
|
|
||||
Commercial paper
|
20,984
|
|
—
|
|
—
|
|
20,984
|
|
||||
Corporate bonds
|
124,540
|
|
565
|
|
(13
|
)
|
125,092
|
|
||||
Municipal debt securities
|
388,574
|
|
840
|
|
(43
|
)
|
389,371
|
|
||||
Cash equivalents and investments
|
$
|
823,518
|
|
$
|
1,443
|
|
$
|
(56
|
)
|
$
|
824,905
|
|
|
September 30, 2011
|
|||||||||||||||||
|
Less than 12 months
|
12 months or greater
|
Total
|
|||||||||||||||
|
Fair Value
|
Gross Unrealized Losses
|
Fair Value
|
Gross Unrealized Losses
|
Fair Value
|
Gross Unrealized Losses
|
||||||||||||
|
(in thousands)
|
|||||||||||||||||
U.S. agency securities
|
$
|
3,997
|
|
$
|
(4
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
3,997
|
|
$
|
(4
|
)
|
Corporate bonds
|
87,613
|
|
(487
|
)
|
—
|
|
—
|
|
87,613
|
|
(487
|
)
|
||||||
Municipal debt securities
|
79,466
|
|
(52
|
)
|
2,081
|
|
(3
|
)
|
81,547
|
|
(55
|
)
|
||||||
Total
|
$
|
171,076
|
|
$
|
(543
|
)
|
$
|
2,081
|
|
$
|
(3
|
)
|
$
|
173,157
|
|
$
|
(546
|
)
|
|
March 30, 2012
|
|||||||||||||||||
|
Less than 12 months
|
12 months or greater
|
Total
|
|||||||||||||||
|
Fair Value
|
Gross Unrealized
Losses
|
Fair Value
|
Gross Unrealized
Losses
|
Fair Value
|
Gross Unrealized
Losses
|
||||||||||||
|
(in thousands)
|
|||||||||||||||||
Corporate bonds
|
$
|
15,642
|
|
$
|
(13
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
15,642
|
|
$
|
(13
|
)
|
Municipal debt securities
|
57,054
|
|
(43
|
)
|
—
|
|
—
|
|
57,054
|
|
(43
|
)
|
||||||
Total
|
$
|
72,696
|
|
$
|
(56
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
72,696
|
|
$
|
(56
|
)
|
|
March 30, 2012
|
|||||
|
Amortized Cost
|
Fair Value
|
||||
|
(in thousands)
|
|||||
Due within 1 year
|
$
|
350,250
|
|
$
|
350,735
|
|
Due in 1 to 2 years
|
193,322
|
|
194,147
|
|
||
Due in 2 to 3 years
|
15,580
|
|
15,657
|
|
||
Total
|
$
|
559,152
|
|
$
|
560,539
|
|
|
September 30,
2011 |
March 30,
2012 |
||||
|
(in thousands)
|
|||||
Raw materials
|
$
|
10,821
|
|
$
|
5,535
|
|
Work in process
|
2,942
|
|
—
|
|
||
Finished goods
|
12,481
|
|
11,027
|
|
||
Inventories
|
$
|
26,244
|
|
$
|
16,562
|
|
|
September 30,
2011 |
March 30,
2012 |
||||
|
(in thousands)
|
|||||
Prepaid assets
|
$
|
9,365
|
|
$
|
8,373
|
|
Other current assets
|
19,683
|
|
15,297
|
|
||
Income tax receivable
|
7,829
|
|
2,429
|
|
||
Prepaid expenses and other current assets
|
$
|
36,877
|
|
$
|
26,099
|
|
|
September 30,
2011 |
March 30,
2012 |
||||
|
(in thousands)
|
|||||
Land
|
$
|
12,778
|
|
$
|
12,844
|
|
Buildings
|
26,623
|
|
26,804
|
|
||
Leasehold improvements
|
44,021
|
|
59,242
|
|
||
Machinery and equipment
|
20,845
|
|
24,131
|
|
||
Computer systems and software
|
71,220
|
|
80,882
|
|
||
Furniture and fixtures
|
10,537
|
|
12,408
|
|
||
Products provided under operating leases
|
1,060
|
|
—
|
|
||
|
187,084
|
|
216,311
|
|
||
Less: accumulated depreciation
|
(69,977
|
)
|
(80,794
|
)
|
||
Property, plant and equipment, net
|
$
|
117,107
|
|
$
|
135,517
|
|
|
|
||
|
(in thousands)
|
||
Balance at September 30, 2011
|
$
|
263,260
|
|
Acquired goodwill
|
—
|
|
|
Translation adjustments
|
1,490
|
|
|
Balance at March 30, 2012
|
$
|
264,750
|
|
|
September 30, 2011
|
March 30, 2012
|
||||||||||||||||
|
Cost
|
Accumulated
Amortization
|
Net
|
Cost
|
Accumulated
Amortization
|
Net
|
||||||||||||
Intangible assets subject to amortization:
|
(in thousands)
|
|||||||||||||||||
Acquired patents and technology
|
$
|
61,611
|
|
$
|
(32,146
|
)
|
$
|
29,465
|
|
$
|
61,570
|
|
$
|
(36,251
|
)
|
$
|
25,319
|
|
Customer relationships
|
30,748
|
|
(12,821
|
)
|
17,927
|
|
30,748
|
|
(14,409
|
)
|
16,339
|
|
||||||
Customer contracts
|
6,063
|
|
(6,063
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Other intangibles
|
20,308
|
|
(16,127
|
)
|
4,181
|
|
20,308
|
|
(17,150
|
)
|
3,158
|
|
||||||
Total
|
$
|
118,730
|
|
$
|
(67,157
|
)
|
$
|
51,573
|
|
$
|
112,626
|
|
$
|
(67,810
|
)
|
$
|
44,816
|
|
Fiscal Year
|
Amortization
Expense |
||
|
(in thousands)
|
||
Remainder of 2012
|
$
|
5,968
|
|
2013
|
11,923
|
|
|
2014
|
10,279
|
|
|
2015
|
7,823
|
|
|
2016
|
5,654
|
|
|
Thereafter
|
3,169
|
|
|
Total
|
$
|
44,816
|
|
|
September 30,
2011 |
March 30,
2012 |
||||
|
(in thousands)
|
|||||
Amounts payable to joint licensing program partners
|
$
|
42,502
|
|
$
|
42,350
|
|
Accrued compensation and benefits
|
41,168
|
|
35,796
|
|
||
Accrued customer refunds and deposits
|
10,849
|
|
11,011
|
|
||
Accrued professional fees
|
5,727
|
|
4,324
|
|
||
Other accrued liabilities
|
16,789
|
|
14,764
|
|
||
Accrued liabilities
|
$
|
117,035
|
|
$
|
108,245
|
|
|
September 30,
2011 |
March 30,
2012 |
||||
|
(in thousands)
|
|||||
Supplemental retirement plan obligations
|
$
|
1,811
|
|
$
|
2,039
|
|
Non-current tax liabilities
|
13,070
|
|
19,499
|
|
||
Other liabilities
|
8,574
|
|
9,907
|
|
||
Other non-current liabilities
|
$
|
23,455
|
|
$
|
31,445
|
|
Level 1:
|
Quoted prices in active markets at the measurement date for identical assets and liabilities.
|
Level 2:
|
Prices may be based upon quoted prices in active markets or inputs not quoted on active markets but are corroborated by market data.
|
Level 3:
|
Unobservable inputs are used when little or no market data is available and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.
|
|
September 30, 2011
|
|||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
|
(in thousands)
|
|||||||||||
Assets:
|
|
|
|
|
||||||||
Investments held in supplemental retirement plan (1)
|
$
|
1,891
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,891
|
|
Money market funds (2)
|
142,038
|
|
—
|
|
—
|
|
142,038
|
|
||||
Corporate bonds (3)
|
—
|
|
176,958
|
|
—
|
|
176,958
|
|
||||
Municipal debt securities (3)
|
—
|
|
472,201
|
|
—
|
|
472,201
|
|
||||
U.S. agency securities (2), (3)
|
29,919
|
|
—
|
|
—
|
|
29,919
|
|
||||
Total
|
$
|
173,848
|
|
$
|
649,159
|
|
$
|
—
|
|
$
|
823,007
|
|
(1)
|
These assets are included within prepaid expenses and other current assets and within other non-current assets.
|
(2)
|
These assets are included within cash and cash equivalents.
|
(3)
|
These assets are included within short-term investments and within long-term investments.
|
|
September 30, 2011
|
|||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
|
(in thousands)
|
|||||||||||
Liabilities:
|
|
|
|
|
||||||||
Investments held in supplemental retirement plan (1)
|
$
|
1,891
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,891
|
|
Total
|
$
|
1,891
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,891
|
|
(1)
|
These liabilities are included within accrued compensation and benefits and within other non-current liabilities.
|
|
March 30, 2012
|
|||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
|
(in thousands)
|
|||||||||||
Assets:
|
|
|
|
|
||||||||
Investments held in supplemental retirement plan (1)
|
$
|
2,137
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,137
|
|
Money market funds (2)
|
264,366
|
|
—
|
|
—
|
|
264,366
|
|
||||
Commercial paper (3)
|
—
|
|
20,984
|
|
—
|
|
20,984
|
|
||||
Corporate bonds (4)
|
—
|
|
125,092
|
|
—
|
|
125,092
|
|
||||
Municipal debt securities (4)
|
—
|
|
389,371
|
|
—
|
|
389,371
|
|
||||
U.S. agency securities (4)
|
25,092
|
|
—
|
|
—
|
|
25,092
|
|
||||
Total
|
$
|
291,595
|
|
$
|
535,447
|
|
$
|
—
|
|
$
|
827,042
|
|
(1)
|
These assets are included within prepaid expenses and other current assets and within other non-current assets.
|
(2)
|
These assets are included within cash and cash equivalents.
|
(3)
|
These assets are included within short-term investments.
|
(4)
|
These assets are included within short-term investments and within long-term investments.
|
|
March 30, 2012
|
|||||||||||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||
|
(in thousands)
|
|||||||||||
Liabilities:
|
|
|
|
|
||||||||
Investments held in supplemental retirement plan (1)
|
$
|
2,137
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,137
|
|
Total
|
$
|
2,137
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,137
|
|
(1)
|
These liabilities are included within accrued compensation and benefits and within other non-current liabilities.
|
|
Fiscal Quarter Ended
|
Fiscal Year-to-Date Ended
|
||||||||||
|
April 1,
2011 |
March 30,
2012 |
April 1,
2011 |
March 30,
2012 |
||||||||
|
(in thousands)
|
|||||||||||
Stock-based compensation expense:
|
|
|
|
|||||||||
Stock options
|
$
|
6,130
|
|
$
|
5,995
|
|
$
|
13,027
|
|
$
|
12,054
|
|
Restricted stock units
|
4,595
|
|
5,880
|
|
8,721
|
|
11,144
|
|
||||
Employee stock purchase plan
|
184
|
|
144
|
|
366
|
|
225
|
|
||||
Stock appreciation rights
|
(169
|
)
|
44
|
|
(114
|
)
|
79
|
|
||||
Total stock-based compensation expense
|
$
|
10,740
|
|
$
|
12,063
|
|
$
|
22,000
|
|
$
|
23,502
|
|
|
Fiscal Quarter Ended
|
Fiscal Year-to-Date Ended
|
||||||||||
|
April 1,
2011 |
March 30,
2012 |
April 1,
2011 |
March 30,
2012 |
||||||||
|
(in thousands)
|
|||||||||||
Stock-based compensation expense was classified as follows:
|
|
|
|
|||||||||
Cost of products
|
$
|
168
|
|
$
|
179
|
|
$
|
314
|
|
$
|
345
|
|
Cost of services
|
44
|
|
61
|
|
82
|
|
117
|
|
||||
Research and development
|
2,611
|
|
2,968
|
|
4,934
|
|
5,632
|
|
||||
Sales and marketing
|
3,367
|
|
4,004
|
|
6,363
|
|
7,719
|
|
||||
General and administrative
|
4,550
|
|
4,851
|
|
10,307
|
|
9,689
|
|
||||
Total stock-based compensation expense
|
$
|
10,740
|
|
$
|
12,063
|
|
$
|
22,000
|
|
$
|
23,502
|
|
|
Shares
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining
Contractual Life
|
Aggregate
Intrinsic
Value
|
||||||
|
(in thousands)
|
|
(in years)
|
(in thousands)
|
||||||
Stock options outstanding at September 30, 2011
|
5,801
|
|
$
|
45.19
|
|
|
|
|||
Grants
|
2,086
|
|
31.55
|
|
|
|
||||
Exercises
|
(181
|
)
|
24.34
|
|
|
|
||||
Forfeitures and cancellations
|
(269
|
)
|
51.49
|
|
|
|
||||
Stock options outstanding at March 30, 2012
|
7,437
|
|
$
|
41.64
|
|
7.8
|
|
$
|
34,766
|
|
Stock options vested at March 30, 2012 and expected to vest
|
7,143
|
|
$
|
41.61
|
|
7.7
|
|
$
|
33,732
|
|
Stock options exercisable at March 30, 2012
|
3,355
|
|
$
|
40.27
|
|
6.3
|
|
$
|
19,438
|
|
|
Fiscal Quarter Ended
|
Fiscal Year-to-Date Ended
|
||||||
|
April 1,
2011 |
March 30,
2012 |
April 1,
2011 |
March 30,
2012 |
||||
Expected life (in years)
|
4.40
|
|
4.53
|
|
4.40
|
|
4.53
|
|
Risk-free interest rate
|
1.6
|
%
|
0.7
|
%
|
1.5
|
%
|
0.7
|
%
|
Expected stock price volatility
|
41.2
|
%
|
43.5
|
%
|
41.5
|
%
|
44.4
|
%
|
Dividend yield
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Shares
|
Weighted Average
Fair Value
|
|||
|
(in thousands)
|
|
|||
Non-vested at September 30, 2011
|
946
|
|
$
|
53.71
|
|
Granted
|
1,082
|
|
32.08
|
|
|
Vested
|
(336
|
)
|
51.44
|
|
|
Forfeitures and cancellations
|
(47
|
)
|
48.00
|
|
|
Non-vested at March 30, 2012
|
1,645
|
|
$
|
40.11
|
|
|
Severance
|
Facilities and
contract termination costs |
Fixed assets
write-off |
Other associated
costs |
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||
Balance at September 30, 2011
|
$
|
2,250
|
|
$
|
—
|
|
$
|
—
|
|
$
|
120
|
|
$
|
2,370
|
|
Restructuring charges
|
318
|
|
432
|
|
424
|
|
104
|
|
1,278
|
|
|||||
Cash payments
|
(2,435
|
)
|
—
|
|
—
|
|
(185
|
)
|
(2,620
|
)
|
|||||
Non-cash charges
|
5
|
|
93
|
|
(424
|
)
|
—
|
|
(326
|
)
|
|||||
Balance at March 30, 2012
|
$
|
138
|
|
$
|
525
|
|
$
|
—
|
|
$
|
39
|
|
$
|
702
|
|
|
Payments Due By Fiscal Period
|
||||||||||||||||||||
|
Remainder of 2012
|
2013
|
2014
|
2015
|
2016
|
Thereafter
|
Total
|
||||||||||||||
|
(in thousands)
|
||||||||||||||||||||
Operating leases (1)
|
$
|
4,378
|
|
$
|
10,321
|
|
$
|
9,279
|
|
$
|
7,084
|
|
$
|
5,912
|
|
$
|
10,097
|
|
$
|
47,071
|
|
Purchase obligations (2)
|
1,695
|
|
2,972
|
|
361
|
|
—
|
|
—
|
|
—
|
|
5,028
|
|
|||||||
Total
|
$
|
6,073
|
|
$
|
13,293
|
|
$
|
9,640
|
|
$
|
7,084
|
|
$
|
5,912
|
|
$
|
10,097
|
|
$
|
52,099
|
|
(1)
|
Operating lease payments include future minimum rental commitments, including those payable to our principal stockholder, for non-cancelable operating leases of office space as of
March 30, 2012
.
|
(2)
|
Our purchase obligations consist of agreements to purchase goods and services, entered into in the ordinary course of business. These represent non-cancelable commitments for which a penalty would be imposed if the agreement was cancelled for any reason other than an event of default as
|
|
Shares
Repurchased
|
Cost
(in thousands)
(1)
|
Average
Price Paid
per Share (2)
|
|||||
Repurchase activity for the fiscal quarter ended December 30, 2011
|
885,969
|
|
$
|
26,068
|
|
$
|
29.41
|
|
Repurchase activity for the fiscal quarter ended March 30, 2012
|
1,575,891
|
|
$
|
60,081
|
|
$
|
38.11
|
|
Total
|
2,461,860
|
|
$
|
86,149
|
|
|
(1)
|
Cost of share repurchases includes the price paid per share and applicable commissions.
|
(2)
|
Excludes commission costs.
|
|
Fiscal Quarter Ended
|
Fiscal Year-to-Date Ended
|
||||||||||
|
April 1,
2011 |
March 30,
2012 |
April 1,
2011 |
March 30,
2012 |
||||||||
|
(in thousands)
|
|||||||||||
Net income including controlling interest
|
$
|
82,482
|
|
$
|
88,317
|
|
$
|
169,247
|
|
$
|
161,683
|
|
Other comprehensive income:
|
|
|
|
|
||||||||
Foreign currency translation adjustment, net of tax
|
2,237
|
|
1,934
|
|
3,344
|
|
1,557
|
|
||||
Unrealized losses on available-for-sale securities, net of tax
|
220
|
|
306
|
|
(656
|
)
|
192
|
|
||||
Comprehensive income
|
84,939
|
|
90,557
|
|
171,935
|
|
163,432
|
|
||||
Less: comprehensive income attributable to controlling interest
|
(555
|
)
|
(415
|
)
|
(933
|
)
|
(556
|
)
|
||||
Comprehensive income attributable to Dolby Laboratories, Inc.
|
$
|
84,384
|
|
$
|
90,142
|
|
$
|
171,002
|
|
$
|
162,876
|
|
|
September 30,
2011 |
March 30,
2012 |
|||
|
(in thousands)
|
||||
Accumulated foreign currency translation gains, net of tax of ($2,653) at September 30, 2011 and ($3,026) at March 30, 2012
|
$
|
6,834
|
|
8,239
|
|
Accumulated unrealized gains on available-for-sale securities, net of tax of ($387) at September 30, 2011 and ($496) at March 30, 2012
|
699
|
|
891
|
|
|
Total accumulated other comprehensive income
|
$
|
7,533
|
|
9,130
|
|
|
Dolby
Laboratories, Inc.
|
Controlling
Interest
|
Total
|
||||||
|
(in thousands)
|
||||||||
Balance at September 24, 2010
|
$
|
1,473,737
|
|
$
|
20,942
|
|
$
|
1,494,679
|
|
Net income
|
168,448
|
|
799
|
|
169,247
|
|
|||
Translation adjustments, net of taxes of ($301)
|
3,210
|
|
134
|
|
3,344
|
|
|||
Unrealized losses on available-for-sale securities, net of taxes of $406
|
(656
|
)
|
—
|
|
(656
|
)
|
|||
Stock-based compensation expense
|
22,111
|
|
—
|
|
22,111
|
|
|||
Repurchase of common stock
|
(75,124
|
)
|
—
|
|
(75,124
|
)
|
|||
Tax benefit from the exercise of stock options and vesting of restricted stock units
|
11,320
|
|
—
|
|
11,320
|
|
|||
Common stock issued under employee stock plans, net of shares withheld for taxes
|
15,215
|
|
—
|
|
15,215
|
|
|||
Balance at April 1, 2011
|
$
|
1,618,261
|
|
$
|
21,875
|
|
$
|
1,640,136
|
|
|
Dolby
Laboratories, Inc.
|
Controlling
Interest
|
Total
|
||||||
|
(in thousands)
|
||||||||
Balance at September 30, 2011
|
$
|
1,663,513
|
|
$
|
21,837
|
|
$
|
1,685,350
|
|
Net income
|
161,279
|
|
404
|
|
161,683
|
|
|||
Distributions to controlling interest
|
—
|
|
(13
|
)
|
(13
|
)
|
|||
Translation adjustments, net of taxes of ($373)
|
1,405
|
|
152
|
|
1,557
|
|
|||
Unrealized losses on available-for-sale securities, net of taxes of ($109)
|
192
|
|
—
|
|
192
|
|
|||
Stock-based compensation expense
|
23,536
|
|
—
|
|
23,536
|
|
|||
Repurchase of common stock
|
(86,149
|
)
|
—
|
|
(86,149
|
)
|
|||
Tax benefit from the exercise of stock options and vesting of restricted stock units
|
(2,513
|
)
|
—
|
|
(2,513
|
)
|
|||
Common stock issued under employee stock plans, net of shares withheld for taxes
|
3,524
|
|
—
|
|
3,524
|
|
|||
Balance at March 30, 2012
|
$
|
1,764,787
|
|
$
|
22,380
|
|
$
|
1,787,167
|
|
|
Fiscal Quarter Ended
|
Fiscal Year-to-Date Ended
|
||||||||||
|
April 1,
2011 |
March 30,
2012 |
April 1,
2011 |
March 30,
2012 |
||||||||
|
(in thousands, except per share amounts)
|
|||||||||||
Numerator:
|
|
|
|
|
||||||||
Net income attributable to Dolby Laboratories, Inc.
|
$
|
82,061
|
|
$
|
88,120
|
|
$
|
168,448
|
|
$
|
161,279
|
|
Denominator:
|
|
|
|
|
||||||||
Weighted-average shares outstanding - basic
|
112,140
|
|
108,415
|
|
112,086
|
|
108,650
|
|
||||
Potential common shares from options to purchase Class A and Class B common stock
|
1,015
|
|
521
|
|
1,206
|
|
445
|
|
||||
Potential common shares from restricted stock units
|
191
|
|
234
|
|
243
|
|
147
|
|
||||
Weighted-average shares outstanding - diluted
|
113,346
|
|
109,170
|
|
113,535
|
|
109,242
|
|
||||
Net income per share attributable to Dolby Laboratories, Inc. - basic
|
$
|
0.73
|
|
$
|
0.81
|
|
$
|
1.50
|
|
$
|
1.48
|
|
Net income per share attributable to Dolby Laboratories, Inc. - diluted
|
$
|
0.72
|
|
$
|
0.81
|
|
$
|
1.48
|
|
$
|
1.48
|
|
Anti-dilutive options excluded from calculation
|
2,836
|
|
5,830
|
|
2,855
|
|
6,250
|
|
||||
Anti-dilutive restricted stock units excluded from calculation
|
426
|
|
439
|
|
431
|
|
1,592
|
|
•
|
We offer products, services, and technologies to creators and distributors of entertainment content, such as motion picture, television, and music recording studios, television broadcasters, satellite and cable operators, and increasingly, Internet content streaming and download service providers. These content creators and distributors use our products,
|
•
|
We license technologies, such as Dolby Digital, Dolby Digital Plus, and Dolby Pulse, to OEMs and software vendors for incorporation into their CE and other products, so that consumers can play back audio content with our technologies in the rich, clear, and immersive manner the creators intended.
|
•
|
We work directly with standards-setting organizations in the entertainment and technology industries, as well as governments and other regulatory bodies, to promote adoption of our technologies in their standards. As a result our technologies are included in virtually all DVD players, Blu-ray Disc players, audio/video receivers, and personal computer (“PC”) DVD software players.
|
•
|
Broadcast market: primarily televisions and set-top boxes
|
•
|
PC market: primarily DVD software players and Microsoft Windows operating systems
|
•
|
CE market: primarily DVD and Blu-ray Disc players and recorders, audio/video receivers, and home-theater-in-a-box systems
|
•
|
Other markets:
|
◦
|
Mobile – primarily cell phones and other mobile devices
|
◦
|
Gaming – primarily video game consoles
|
◦
|
Licensing services – primarily administration of joint licensing programs
|
◦
|
Automotive – primarily in-car DVD players
|
•
|
The extent and rate at which Windows 8 is adopted in the marketplace;
|
•
|
The extent to which OEMs include optical disc playback in Windows 8 devices;
|
•
|
The extent to which earlier versions of Microsoft operating systems, including Windows 7, continue to be licensed after the release of Windows 8;
|
•
|
Our ability to establish and extend licensing relationships directly with PC OEMs and ISVs;
|
•
|
The rate at which entertainment content shifts from optical disc media to online media, thus reducing the need for PCs to have optical disc drives and DVD and Blu-ray Disc software players; and
|
•
|
Our ability to extend the adoption of our technologies to online and mobile platforms.
|
•
|
Purchasing trends away from traditional PCs and toward computing devices without optical disc, such as subnotebooks and tablets, which may not include our technologies;
|
•
|
The availability and market attractiveness of PC software that includes our technologies on an unauthorized and infringing basis, for which we receive no royalty payments; and
|
•
|
Continued decreasing inclusion of ISV media applications by PC OEMs in their Windows 7-based PCs, as Windows 7 already incorporates DVD playback software.
|
|
Fiscal Quarter Ended
|
Fiscal Year-to-Date Ended
|
||||||||||
|
April 1,
2011 |
March 30,
2012 |
April 1,
2011 |
March 30,
2012 |
||||||||
|
($ in thousands)
|
|||||||||||
Cost of licensing
|
$
|
5,771
|
|
$
|
3,303
|
|
$
|
9,732
|
|
$
|
6,631
|
|
Licensing gross margin percentage
|
97
|
%
|
99
|
%
|
98
|
%
|
98
|
%
|
||||
Cost of products
|
20,031
|
|
17,635
|
|
42,229
|
|
31,523
|
|
||||
Products gross margin percentage
|
24
|
%
|
35
|
%
|
42
|
%
|
41
|
%
|
||||
Cost of services
|
2,655
|
|
2,654
|
|
5,635
|
|
5,848
|
|
||||
Services gross margin percentage
|
71
|
%
|
65
|
%
|
68
|
%
|
61
|
%
|
||||
Total gross margin percentage
|
89
|
%
|
91
|
%
|
88
|
%
|
91
|
%
|
|
Fiscal Quarter Ended
|
Change
|
Fiscal Year-to-Date ended
|
Change
|
||||||||||||||||||
|
April 1,
2011 |
March 30,
2012 |
$
|
%
|
April 1,
2011 |
March 30,
2012 |
$
|
%
|
||||||||||||||
|
($ in thousands)
|
|||||||||||||||||||||
Research and development
|
$
|
28,399
|
|
$
|
34,236
|
|
$
|
5,837
|
|
21
|
%
|
$
|
56,726
|
|
$
|
67,062
|
|
$
|
10,336
|
|
18
|
%
|
Percentage of total revenue
|
11
|
%
|
13
|
%
|
|
|
12
|
%
|
13
|
%
|
|
|
||||||||||
Sales and marketing
|
37,545
|
|
43,194
|
|
5,649
|
|
15
|
%
|
75,762
|
|
86,210
|
|
10,448
|
|
14
|
%
|
||||||
Percentage of total revenue
|
15
|
%
|
17
|
%
|
|
|
15
|
%
|
17
|
%
|
|
|
||||||||||
General and administrative
|
35,155
|
|
37,281
|
|
2,126
|
|
6
|
%
|
72,197
|
|
72,746
|
|
549
|
|
1
|
%
|
||||||
Percentage of total revenue
|
14
|
%
|
14
|
%
|
|
|
15
|
%
|
14
|
%
|
|
|
||||||||||
Restructuring charges, net
|
—
|
|
910
|
|
910
|
|
100
|
%
|
785
|
|
1,278
|
|
493
|
|
63
|
%
|
||||||
Percentage of total revenue
|
n/a
|
|
n/a
|
|
|
|
n/a
|
|
n/a
|
|
|
|
||||||||||
|
$
|
101,099
|
|
$
|
115,621
|
|
$
|
14,522
|
|
14
|
%
|
$
|
205,470
|
|
$
|
227,296
|
|
$
|
21,826
|
|
11
|
%
|
|
Fiscal Quarter Ended
|
Change
|
Fiscal Year-to-Date ended
|
Change
|
||||||||||||||||||
|
April 1,
2011 |
March 30,
2012 |
$
|
%
|
April 1,
2011 |
March 30,
2012 |
$
|
%
|
||||||||||||||
|
($ in thousands)
|
|||||||||||||||||||||
Interest income
|
$
|
1,953
|
|
$
|
1,414
|
|
$
|
(539
|
)
|
(28
|
)%
|
$
|
3,567
|
|
$
|
3,151
|
|
$
|
(416
|
)
|
(12
|
)%
|
Interest expense
|
(85
|
)
|
(5
|
)
|
80
|
|
94
|
%
|
(368
|
)
|
(31
|
)
|
337
|
|
92
|
%
|
||||||
Other income, net
|
156
|
|
60
|
|
(96
|
)
|
(62
|
)%
|
689
|
|
260
|
|
(429
|
)
|
(62
|
)%
|
||||||
Total other income, net
|
$
|
2,024
|
|
$
|
1,469
|
|
$
|
(555
|
)
|
(27
|
)%
|
$
|
3,888
|
|
$
|
3,380
|
|
$
|
(508
|
)
|
(13
|
)%
|
|
Fiscal Quarter Ended
|
Fiscal Year-to-Date ended
|
||||||||||
|
April 1,
2011 |
March 30,
2012 |
April 1,
2011 |
March 30,
2012 |
||||||||
|
($ in thousands)
|
|||||||||||
Provision for income taxes
|
$
|
40,012
|
|
$
|
34,198
|
|
$
|
64,313
|
|
$
|
64,036
|
|
Effective tax rate
|
33
|
%
|
28
|
%
|
28
|
%
|
28
|
%
|
|
September 30,
2011 |
March 30,
2012 |
||||
|
(in thousands)
|
|||||
Cash and cash equivalents
|
$
|
551,512
|
|
$
|
747,988
|
|
Short-term investments
|
391,281
|
|
350,735
|
|
||
Long-term investments
|
272,797
|
|
209,804
|
|
||
Accounts receivable, net
|
61,815
|
|
57,762
|
|
||
Accounts payable and accrued liabilities
|
127,922
|
|
113,689
|
|
||
Working capital
(a)
|
999,213
|
|
1,144,207
|
|
||
|
|
|
||||
|
April 1,
2011 |
March 30,
2012 |
||||
|
(in thousands)
|
|||||
Net cash provided by operating activities
|
$
|
171,591
|
|
$
|
214,669
|
|
Capital expenditures
(b)
|
(19,551
|
)
|
(30,450
|
)
|
||
Repurchase of common stock
|
(75,124
|
)
|
(86,149
|
)
|
||
Net cash provided by/(used in) investing activities
|
(149,735
|
)
|
64,410
|
|
||
Net cash used in financing activities
|
(48,604
|
)
|
(82,200
|
)
|
•
|
An increase in the cash flows from collections of accounts receivable from the fiscal year-to-date period ended April 1, 2011 to the fiscal year-to-date period ended March 30, 2012; and
|
•
|
Increases in cash flows from other changes in operating assets and liabilities; partially offset by
|
•
|
A decrease in net income.
|
•
|
A decrease in purchases of available-for-sale securities; offset by
|
•
|
A decrease in proceeds from the sales and maturities of available-for-sale securities; and
|
•
|
A decrease in capital expenditures due to significant worldwide expansion in the first half of fiscal 2011.
|
•
|
A decrease in net proceeds from the exercise of stock options and the related tax benefit; and
|
•
|
An increase in share repurchases of our Class A common stock.
|
•
|
Purchasing trends away from traditional PCs and toward computing devices without optical disc, such as subnotebooks and tablets, which may not include our technologies;
|
•
|
The availability and market attractiveness of PC software that includes our technologies on an unauthorized and infringing basis, for which we receive no royalty payments; and
|
•
|
Continued decreasing inclusion of ISV media applications by PC OEMs in their Windows 7- based PCs, as Windows 7 already incorporates DVD playback software.
|
•
|
The extent and rate at which Windows 8 is adopted in the marketplace;
|
•
|
The extent to which OEMs include optical disc playback in Windows 8 devices;
|
•
|
The extent to which earlier versions of Microsoft operating systems, including Windows 7, continue to be licensed after the release of Windows 8;
|
•
|
Our ability to establish and extend licensing relationships directly with PC OEMs and ISVs;
|
•
|
The rate at which entertainment content shifts from optical disc media to online media, thus reducing the need for PCs to have optical disc drives and DVD and Blu-ray Disc software players; and
|
•
|
Our ability to extend the adoption of our technologies to online and mobile platforms and devices.
|
•
|
Rapid technological change;
|
•
|
New and improved technology and product introductions;
|
•
|
Changing consumer and licensee demands;
|
•
|
Evolving industry standards; and
|
•
|
Technology and product obsolescence.
|
•
|
We face risks that our customers maintain excess product inventory levels which could reduce future anticipated sales;
|
•
|
At least one of our competitors has exclusive licensing arrangements for 3D products with theater exhibitors, which has in the past and we expect will in the future restrict our ability to compete in the 3D market;
|
•
|
The 3D market has become increasingly competitive and we may lose further market share;
|
•
|
As the industry transition to 3D enabled screens becomes substantially complete, demand for new 3D enabled screens will drop significantly and the industry will enter into a replacement cycle;
|
•
|
Industry participants may perceive our up-front 3D equipment costs and reusable glasses business model or our 3D products as less attractive;
|
•
|
Our participation in the 3D cinema market will be limited to the extent theaters do not convert from analog to digital cinema;
|
•
|
Demand for our 3D cinema products is driven by the number of 3D cinema releases and the commercial success of those releases;
|
•
|
Our 3D glasses could become subject to regulation in the U.S. and other countries in the future, which could restrict how our 3D glasses are manufactured, used, or marketed; and
|
•
|
There has been increased public scrutiny of potential health risks relating to viewing 3D movies. If these potential health risks are substantiated, the popularity of 3D movies could decline. In addition, if health risks associated with our 3D products materialize, we may become subject to government regulation or product liability claims, including personal injury claims.
|
•
|
The timing of when we receive royalty reports from our licensees and when we have met all revenue recognition criteria;
|
•
|
Royalty reports including positive or negative corrective adjustments;
|
•
|
Retroactive royalties that cover extended periods of time;
|
•
|
The recognition of unusually large amounts of licensing revenue from licensees in any given quarter because not all of our revenue recognition criteria were met in prior periods; and
|
•
|
The recognition of large amounts of products and services revenue in any given quarter because not all of our revenue recognition criteria were met in prior periods.
|
•
|
Exhibitors may perceive competing products to be potentially advantageous to our products or they may choose lower priced competing products or competing products with different features, such as support for high frame rate content or 4K presentation;
|
•
|
If we encounter delays in the development of our 4K digital cinema or high frame rate content solutions or if we are unable to provide a solution with a market competitive feature set and price, our results of operations could be adversely affected;
|
•
|
At least one of our competitors has a significantly greater installed base of its digital cinema servers than we do which has and likely will continue to limit our share of the digital cinema market, particularly in the U.S. market;
|
•
|
Pricing and other competitive pressures have caused us to implement pricing strategies which have had an adverse
|
•
|
As the industry transition to digital cinema becomes substantially complete, the demand for new digital cinema screens will drop significantly and the industry will enter into a replacement cycle.
|
•
|
Diversion of management time and focus from operating our business to acquisition integration challenges;
|
•
|
Cultural and logistical challenges associated with integrating employees from acquired businesses into our organization;
|
•
|
Retaining employees from businesses we acquire;
|
•
|
The need to implement or improve internal controls, procedures, and policies appropriate for a public company at businesses that prior to the acquisition may have lacked effective controls, procedures, and policies;
|
•
|
Possible write-offs or impairment charges resulting from acquisitions;
|
•
|
Unanticipated or unknown liabilities relating to acquired businesses; and
|
•
|
The need to integrate acquired businesses’ accounting, management information, manufacturing, human resources, and other administrative systems to permit effective management.
|
•
|
Our ability to enforce our contractual and intellectual property rights, especially in those foreign countries that do not recognize and enforce intellectual property rights to the same extent as do the U.S., Japan, and European countries, which increases the risk of unauthorized, and uncompensated, use of our technologies;
|
•
|
U.S. and foreign government trade restrictions, including those which may impose restrictions on importation of programming, technology, or components to or from the U.S.;
|
•
|
Our ability to comply with applicable international laws and regulations governing our business and operations, including local consumer and safety laws, as well as license requirements;
|
•
|
Foreign government taxes, regulations, and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in the U.S., and other laws limiting our ability to repatriate funds to the U.S.;
|
•
|
Burdens of complying with a variety of foreign laws;
|
•
|
Changes in diplomatic and trade relationships;
|
•
|
Difficulty in establishing, staffing, and managing foreign operations;
|
•
|
Adverse fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities we undertake;
|
•
|
Political or social instability, natural disasters, war or events of terrorism; and
|
•
|
The strength of international economies.
|
•
|
Fluctuations in demand for our products and for the digital entertainment products of our licensees;
|
•
|
Adverse developments in general economic conditions;
|
•
|
The amount and timing of our operating costs, capital expenditures, and related charges, including those related to the expansion or consolidation of our business, operations, and infrastructure;
|
•
|
Changes in business cycles that affect the markets in which we sell our products and services or the markets for consumer entertainment products incorporating our technologies;
|
•
|
Fluctuations in the timing of royalty reports we receive from our licensees, including late or sporadic reports;
|
•
|
Variations in the time-to-market of our technologies in the entertainment industry markets in which we operate;
|
•
|
Corrections to licensees’ reports received in periods subsequent to those in which the original revenue was reported;
|
•
|
The announcement, introduction, or enhancement of technologies, products, and services, by us, our licensees, and our competitors, and market acceptance of these new or enhanced technologies, products, and services;
|
•
|
Rapid, wholesale changes in technology in the entertainment industries in which we compete;
|
•
|
Events and conditions in the cinema industry, including box office receipts that affect the number of theaters constructed, the number of movies produced and exhibited, the general popularity of motion pictures, and strikes by cinema industry participants;
|
•
|
The financial resources of cinema exhibitors available to buy our products or to equip their theaters to accommodate upgraded or new technologies;
|
•
|
Consolidation by participants in the markets in which we compete, which could result among other things in pricing pressure;
|
•
|
Seasonal electronics product shipment patterns by our system licensees, particularly in the first quarter, which generally result in revenue in the second quarter;
|
•
|
The impact of, and our ability to react to, interruptions in the entertainment distribution process, including as a result of work stoppages at our facilities, our customers’ facilities, and other points throughout the entertainment distribution process;
|
•
|
Adverse outcomes of litigation or governmental proceedings, including any foreign, federal, state, or local tax assessments or audits;
|
•
|
Repurchases we make of our common stock;
|
•
|
Costs of litigation and intellectual property protection;
|
•
|
Exchange rate fluctuations between the U.S. dollar and other currencies;
|
•
|
Variations between our operating results and published analysts’ expectations; and
|
•
|
Announcements by our competitors or significant customers.
|
•
|
Earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates;
|
•
|
Changes in the valuation of our deferred tax assets and liabilities;
|
•
|
Expiration of or lapses in the R&D tax credit laws;
|
•
|
Fluctuations in tax exempt interest income;
|
•
|
Transfer pricing adjustments;
|
•
|
Tax effects of nondeductible compensation;
|
•
|
Tax costs related to intercompany realignments;
|
•
|
Changes in accounting principles; or
|
•
|
Changes in tax laws and regulations, including possible U.S. changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, or the foreign tax credit rules.
|
|
Total Number
of Shares Purchased |
Average Price
Paid per Share (1) |
Total Number of
Shares Purchased as Part of Publicly Announced Plans or Programs (2) |
Maximum Number (or
Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (3) |
||||
December 31, 2011 - January 27, 2012
|
83,805
|
|
$
|
33.56
|
|
83,805
|
|
$ 337.5 million
|
January 28, 2012 - February 24, 2012
|
390,580
|
|
38.81
|
|
390,580
|
|
422.3 million
|
|
February 25, 2012 - March 30, 2012
|
1,101,506
|
|
38.21
|
|
1,101,506
|
|
380.2 million
|
|
Total
|
1,575,891
|
|
|
1,575,891
|
|
|
(1)
|
Excludes commission costs.
|
(2)
|
Shares of Class A common stock were purchased under a $250.0 million stock repurchase program announced on November 3, 2009, which was subsequently increased by $300.0 million, $250.0 million, and $100.0 million announced on July 27, 2010, August 4, 2011, and February 8, 2012, respectively. The stock repurchase program does not have an expiration date. Stock repurchases under this program may be made through open market transactions, negotiated purchases, or otherwise, at times and in such amounts as we consider appropriate.
|
(3)
|
Amounts shown in this column reflect amounts remaining under the stock repurchase program.
|
|
|
Incorporated by Reference Herein
|
||
Exhibit
Number
|
Description
|
Form
|
Date
|
|
|
|
|
|
|
10.1*
|
Consulting Agreement by and between David Dolby and Dolby Laboratories, Inc.
|
|
|
|
10.2*
|
Summary of Murray Demo Fiscal 2012 Cash Incentive Arrangement
|
|
|
|
10.3*
|
Offer Letter dated March 22, 2012, by and between Lewis Chew and Dolby Laboratories, Inc.
|
|
|
|
31.1
|
Certification by the Chief Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
Certification by the Chief Financial Officer Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1‡
|
Certification by the Chief Executive Officer and the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS‡
|
XBRL Instance Document
|
|||
101.SCH‡
|
XBRL Taxonomy Extension Schema Document
|
|||
101.CAL‡
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|||
101.DEF‡
|
XBRL Extension Definition
|
|||
101.LAB‡
|
XBRL Taxonomy Extension Label Linkbase Document
|
|||
101.PRE‡
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
DOLBY LABORATORIES, INC.
|
|
||
|
|
|
|
|
|
By:
|
|
/s/ Murray J. Demo
|
|
|
|
|
Murray J. Demo
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting
|
|
|
|
|
Officer and Duly Authorized Officer)
|
|
•
|
Consultant may participate in internal and external meetings, seminars, and trade shows, where technology-related subjects are reviewed or discussed, to the extent that such attendance is consistent with the current agenda of the TSC and with the prior agreement of the Chairman of the TSC or the Chairman of the Board.
|
•
|
Consultant will be provided with adequate administrative support as necessary to perform the Services.
|
|
|
|
|
|
|
|
CONSULTANT
|
|
|
|
DOLBY LABORATORIES, INC.
|
||
|
|
|
|
|||
/s/ David Dolby
|
|
|
|
By:
|
|
/s/ Andy Sherman
|
David Dolby
|
|
|
|
Name:
Title:
|
|
Andy Sherman
Executive Vice President, General Counsel and Secretary
|
1.
|
That you execute a Confidential Information and Invention Assignment Agreement upon acceptance of our offer of employment.
|
2.
|
That you sign the Acknowledgement of Receipt Form to acknowledge that you have received and read the following:
|
a.
|
Dolby Laboratories, Inc. Code of Business Conduct and Ethics (the “Code”);
|
b.
|
Dolby Laboratories, Inc. Insider Trading Policy (the “Insider Trading Policy”);
|
c.
|
Dolby Laboratories, Inc. Foreign Corrupt Practices Act Policy (the “FCPA Policy”); and
|
d.
|
Dolby Laboratories, Inc. Policy Regarding Reporting of Financial and Accounting Concerns (the “Policy Regarding Reporting of Financial and Accounting Concerns”
|
3.
|
On your first day of employment, you produce documentation that verifies your eligibility to be legally employed in the United States. This documentation generally consists of any combination of documents listed on the enclosed Employment Eligibility Verification (I-9) Form. This documentation must be presented to us on your first working day. As needed, Dolby will sponsor non-immigrant visas for you and your dependents to the extent of your eligibility.
|
4.
|
That there have been no material changes to the information we have previously verified in our background check or to the responses you previously supplied in the officer questionnaire.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Dolby Laboratories, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Kevin J. Yeaman
|
|
Kevin J. Yeaman
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Dolby Laboratories, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Murray J. Demo
|
|
Murray J. Demo
|
|
Executive Vice President and Chief Financial Officer
|
•
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Kevin J. Yeaman
|
|
Kevin J. Yeaman
|
|
President and Chief Executive Officer
|
|
/s/ Murray J. Demo
|
|
Murray J. Demo
|
|
Executive Vice President and Chief Financial Officer
|
|