ý
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ANNUAL 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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(415) 558-0200
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(Address of principal executive offices)
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(Zip Code)
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(Registrant’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Class A common stock, $0.001 par value
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The New York Stock Exchange
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(Title of class)
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(Name of each exchange on which registered)
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Securities registered pursuant to Section 12(g) of the Act:
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Class B common stock, $0.001 par value
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(Title of class)
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Large accelerated filer
ý
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Accelerated filer
¨
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
¨
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PART I
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Item1
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—
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Item1A
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—
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Item1B
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—
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Item 2
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—
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Item 3
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—
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Item 4
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—
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PART II
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Item 5
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—
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Item 6
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—
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Item 7
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—
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Item 7A
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—
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Item 8
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—
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Item 9
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—
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Item 9A
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—
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Item 9B
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—
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PART III
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Item 10
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—
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Item 11
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—
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Item 12
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—
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Item 13
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—
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Item 14
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—
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PART IV
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Item 15
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—
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Fiscal Year Ended
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Revenue
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September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Licensing
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89%
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86%
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83%
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Products
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9%
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11%
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14%
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Services
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2%
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3%
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3%
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Total
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100%
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100%
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100%
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Fiscal Year Ended
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Revenue By Geographic Location
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September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
United States
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28%
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32%
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32%
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International
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72%
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68%
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68%
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Technology
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Description
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Home
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Work
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Cinema
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Mobile
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Dolby Digital
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A digital audio coding technology used to provide multichannel sound in the home from DVDs, digital terrestrial broadcast, cable, and satellite systems, and in theaters. Dolby Digital enables the storage and transmission of up to five full range audio channels plus a low frequency effects channel.
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ü
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ü
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ü
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ü
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Dolby Digital Plus
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A digital audio coding technology built as an extension to Dolby Digital technologies. Dolby Digital Plus offers greater efficiency in transmission and can support a wide range of current applications such as digital television, mobile, and Internet-based content services. Dolby Digital is forward compatible with all existing Dolby Digital Plus equipped consumer electronics.
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ü
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ü
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ü
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AAC
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A high quality audio coding technology appropriate for broadcast and electronic music distribution applications.
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ü
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ü
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ü
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HE-AAC
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An efficient, high quality audio compression technology designed for broadcast, download and streaming content.
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ü
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ü
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ü
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Dolby TrueHD
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An audio delivery technology that delivers bit-for-bit performance upon playback identical to the original studio master. When applied with HD video content, the coding efficiencies of Dolby TrueHD enable content providers to include a 100% lossless audio track on Blu-ray Disc without using excessive storage capacity.
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ü
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Post-Processing Technologies
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Suites of technologies used by entertainment oriented PCs, mobile devices and TVs to enhance the audio quality of media delivered on the device and the device’s audio playback capabilities.
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ü
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ü
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ü
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Dolby Headphone
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An audio technology that provides the sound of a five speaker multichannel playback system through any pair of headphones by modeling the multichannel sound listening experience of a properly calibrated 5.1 channel speaker system.
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ü
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ü
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ü
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Dolby HDR
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Technologies that increase the contrast ratio of LED backlit LCD televisions through the use of local dimming.
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ü
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Dolby Pro Logic
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- Dolby Pro Logic II is a matrix multichannel decoding technology that detects the naturally occurring directional cues in two channel audio content and transforms the content into five playback channels of full bandwidth multichannel sound.
- Dolby Pro Logic II(x) extends Pro Logic II technology to seven playback channels.
- Dolby Pro Logic IIz is one of our matrix decoding technologies, which adds the dimension of height to multichannel sound playback.
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ü
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Dolby Volume
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An audio leveling technology for CE devices and provides consistent volume and quality across various programs.
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ü
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ü
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ü
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Dolby Voice
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An audio conferencing technology with superior spatial perception, voice clarity and background noise reduction that emulates in-person meetings.
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ü
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Dolby 3D
(glasses-free)
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A suite of technologies (non-theatrical) developed by Dolby and Philips® that is applied to both 3D content and displays. It enables playback and consumption of generic 3D content as well as specially encoded Dolby 3D content without the need for special 3D glasses on glasses-free 3D TVs, tablets, laptops or smartphones.
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ü
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Product
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Description
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Digital Cinema Products
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Digital Cinema Products are used for digital encoding, distribution, and playback. Our digital cinema server is used to load, store, decrypt, decode, and re-encrypt digital film files for presentation on digital cinema projectors. We also provide products that encrypt, encode, and package digital films, and digital cinema processors to decode digital cinema soundtracks.
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Digital 3D Products
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Digital 3D Products deliver a 3D image with an existing digital cinema server and white (or silver) screen. Our Dolby 3D glasses feature high quality multicoated lenses that deliver sharp 3D images.
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Digital Media Adapters
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Digital Media Adapters are used to convert existing analog cinema audio systems to the latest digital audio technologies.
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Film-based Cinema Processors
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Film-based Cinema Processors are used to read, decode and playback a film soundtrack and calibrate the sound system in a movie theater.
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Dolby Atmos
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Dolby Atmos is an object-oriented platform enabling precision and flexibility in sound placement for the most natural and realistic experience in a cinema environment; it is delivered within a selection of our Digital Cinema Products.
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Broadcast Products
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Broadcast Products are used to encode, transmit, and decode multiple channels of high quality audio for DTV and HDTV program production and broadcast distribution, and to measure the loudness of broadcast audio content.
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Professional Reference Monitor
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Professional Reference Monitor is a video monitor used during the production and post-production of cinematic and video content in situations where grade 1 reference performance is required.
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Fiscal Year Ended
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September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Research and Development
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$168,746
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$140,143
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$123,920
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Fiscal Year Ended
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September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Sales and Marketing
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$231,103
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$188,486
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$155,202
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Licensed Technologies
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Products
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Services
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Audyssey Laboratories, Inc.
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Barco NV
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Deluxe Corporation
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Beats Electronics, LLC
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Doremi Labs
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DTS, Inc.
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DTS, Inc.
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GDC Technology Limited
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Sony Corporation
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Fraunhofer Institut Integrierte Schaltungen
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IMAX Corporation
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Technicolor
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Koninklijke Philips Electronics NV
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MasterImage 3D, Inc.
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Technicolor
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NEC Corporation
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Thomson Video Networks
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Qube Cinema, Inc.
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Sony Corporation
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QSC Audio Products, LLC
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Waves Audio Ltd.
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RealD, Inc.
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Sony Corporation
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Technicolor
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Ultra Stereo Labs, Inc. (USL)
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XpanD, Inc.
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•
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Degree of access and inclusion in industry standards;
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•
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Technological performance, flexibility, and range of application;
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•
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Brand recognition and reputation;
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•
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Timeliness and relevance of new product introductions;
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•
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Quality and reliability of products and services;
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•
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Relationships with producers, directors, and distributors in the film industry, with television broadcast industry leaders, and with the management of semiconductor and consumer electronics OEMs;
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•
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Availability of compatible high quality audio content; and
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Price.
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Purchasing trends away from traditional PCs and toward computing devices without optical disc drives, such as ultrabooks and tablets;
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•
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PC software that includes our technologies on an unauthorized and infringing basis, for which we receive no royalty payments; and
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•
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Continued decreasing inclusion of independent software vendor media applications by PC OEMs.
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•
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Exhibitors may choose competing products with different features or lower prices;
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•
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Some of our competitors have a significantly greater installed base of digital cinema servers than we do, which may limit our share of the market, particularly in the U.S.; and
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•
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Pricing and other competitive pressures have caused us to implement pricing strategies which have adversely affected gross margins of our cinema products.
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•
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Exclusive licensing arrangements between our competitors and exhibitors;
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•
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Future demand for new 3D enabled screens; and
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•
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Decreases in the number of 3D cinema releases and the commercial success of those releases.
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•
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Timing of royalty reports from our licensees and meeting revenue recognition criteria;
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•
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Royalty reports including positive or negative corrective adjustments;
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•
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Retroactive royalties that cover extended periods of time; and
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•
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The recognition of unusually large amounts of revenue in any given quarter because not all of our revenue recognition criteria were met in prior periods.
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•
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Rapid technological change;
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•
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New and improved technology and frequent product introductions;
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•
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Changing consumer and licensee demands;
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•
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Evolving industry standards; and
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•
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Technology and product obsolescence.
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•
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Possibility that some of these innovations may not be protectable;
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•
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Failure to protect innovations that later turn out to be important;
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•
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Insufficient patent protection to prevent third parties from designing around our patent claims; and
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Possibility that an issued patent may later be found to be invalid or unenforceable.
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•
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Our ability to enforce our contractual and intellectual property rights, especially in countries that do not recognize and enforce intellectual property rights to the same extent as the U.S., Japan, Korea, and European countries do, which increases the risk of unauthorized use of our technologies;
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•
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Limited or no patent protection for our Dolby Digital technologies in countries such as China, Taiwan, and India, which may require us to obtain patent rights for new and existing technologies in order to grow or maintain our revenue; and
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•
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Because of limitations in the legal systems in many countries, our ability to obtain and enforce patents in many countries is uncertain, and we must strengthen and develop relationships with entertainment industry participants worldwide to increase our ability to enforce our intellectual property and contractual rights without relying solely on the legal systems in the countries in which we operate.
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•
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Content creators, such as film directors, studios, music producers and mobile and online content producers;
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•
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Content distributors, such as film exhibitors, broadcasters, operators, and over-the-top ("OTT") video services providers and video game publishers; and
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•
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Device manufacturers.
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•
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Diversion of management time and focus from operating our business to acquisition integration challenges;
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•
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Cultural and logistical challenges associated with integrating employees from acquired businesses into our organization;
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•
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Retaining employees, suppliers and customers from businesses we acquire;
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•
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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;
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•
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Possible write-offs or impairment charges resulting from acquisitions;
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•
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Unanticipated or unknown liabilities relating to acquired businesses; and
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•
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The need to integrate acquired businesses’ accounting, management information, manufacturing, human resources, and other administrative systems to permit effective management.
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•
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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.;
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•
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Compliance with applicable international laws and regulations that may differ or conflict with laws in other countries where we conduct business, or are otherwise not harmonized with one another;
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•
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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.;
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•
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Changes in diplomatic and trade relationships;
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•
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Difficulty in establishing, staffing, and managing foreign operations;
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•
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Adverse fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities we undertake;
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•
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Political or social instability, natural disasters, war or events of terrorism; and
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•
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The strength of international economies.
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•
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Earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in countries that have higher tax rates;
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•
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Changes in the valuation of our deferred tax assets and liabilities;
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•
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Expiration of or lapses in the R&D tax credit laws;
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•
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Fluctuations in tax exempt interest income;
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•
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Transfer pricing adjustments;
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•
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Tax effects of nondeductible compensation;
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•
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Tax costs related to intercompany realignments;
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•
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Any obligations or decisions to repatriate earnings from abroad earlier than anticipated;
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•
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Changes in accounting principles; or
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•
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Changes in tax laws and regulations in the countries in which we operate 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.
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Fiscal 2013
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Fiscal 2012
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||
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High
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Low
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High
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Low
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First Quarter
|
$34.84
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$28.48
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$33.12
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$26.28
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Second Quarter
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33.56
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29.33
|
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39.54
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30.68
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Third Quarter
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35.60
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31.38
|
|
45.11
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36.33
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Fourth Quarter
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35.03
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31.38
|
|
42.69
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30.67
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Total Number
of Shares Purchased |
Average Price
Paid per Share (1) |
Total Number of Shares Repurchased
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Approximate Dollar Value of Remaining Authorized Share Repurchases
(2)
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June 29, 2013 - July 26, 2013
|
—
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$—
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—
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$124.1 million
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July 27, 2013 - August 23, 2013
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149,600
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32.65
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149,600
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$119.3 million
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August 24, 2013 - September 27, 2013
|
100,400
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32.02
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100,400
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$116.1 million
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Total
|
250,000
|
|
250,000
|
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(1)
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Average price paid per share excludes commission costs.
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(2)
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Amounts represent the remaining maximum number of shares (or the approximate dollar value) that may yet be purchased under the stock repurchase program.
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Fiscal Year Ended
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||||
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September 27, 2013
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September 28, 2012
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September 30, 2011
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September 24, 2010
|
September 25, 2009
|
Reclassified implementation licensee settlements
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N/A
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$6,750
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$5,560
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$7,840
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$5,977
|
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Fiscal Year Ended
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||||
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September 27, 2013
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September 28, 2012
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September 30, 2011
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September 24, 2010
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September 25, 2009
|
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(in thousands, except per share amounts)
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Operations:
|
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|
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Revenue
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$909,674
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$933,014
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$961,065
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$930,553
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$725,480
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Gross margin
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812,955
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840,987
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849,894
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790,898
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654,735
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Operating expenses
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567,693
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478,995
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420,161
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369,357
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297,046
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Income before provision for income taxes
|
250,646
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368,991
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440,643
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437,012
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371,419
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Net income attributable to Dolby Laboratories, Inc.
|
189,271
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264,302
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309,267
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283,447
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242,991
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Net income per share:
|
|
|
|
|
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Basic
|
$1.86
|
$2.47
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$2.78
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$2.50
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$2.15
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Diluted
|
$1.84
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$2.46
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$2.75
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$2.46
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$2.11
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Weighted-average shares outstanding:
|
|
|
|
|
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Basic
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101,879
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106,926
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111,444
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113,452
|
113,101
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Diluted
|
102,788
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107,541
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112,554
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115,388
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115,367
|
|
|
|
|
|
|
Cash dividends paid per common share
|
$4.00
|
$—
|
$—
|
$—
|
$—
|
|
September 27, 2013
|
September 28, 2012
|
September 30, 2011
|
September 24, 2010
|
September 25, 2009
|
|
(in thousands)
|
||||
Cash and cash equivalents
|
$454,397
|
$492,600
|
$551,512
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$545,861
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$451,678
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Working capital
|
639,907
|
813,446
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999,213
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894,657
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744,254
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Short-term and long-term investments
|
446,605
|
664,307
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664,078
|
493,106
|
489,746
|
Total assets
|
1,737,945
|
1,960,798
|
1,884,387
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1,711,772
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1,581,315
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Long-term debt
|
—
|
—
|
—
|
—
|
5,825
|
Total stockholders’ equity—Dolby Laboratories, Inc.
|
1,481,110
|
1,720,269
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1,663,513
|
1,473,737
|
1,341,108
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•
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Dolby Voice
. Dolby Voice is one of our newest offerings. It represents an audio conferencing solution that enables virtual meetings to sound and feel more like in-person meetings. During this past year, we announced a global partnership with BT, a leading provider of audio and video conferencing solutions. As part of this arrangement, BT will incorporate Dolby voice into their offerings under a limited exclusivity period. In
October 2013
, BT launched their "BT MeetMe" with Dolby Voice service which will be available to customers worldwide.
|
•
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Dolby 3D for the Home.
In association with Philips and the Cameron Pace Group (CPG) led by director James Cameron, Dolby entered into an agreement to integrate the Dolby® 3D format into CPG's 3D video content production workflow. We believe that glasses-free 3D presentation in the home can be improved by using the Dolby 3D format and we are developing products and solutions aimed at this potential market.
|
|
Fiscal Year Ended
|
|
||
Market
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Main Products Incorporating Our Technologies
|
Broadcast
|
37%
|
34%
|
31%
|
Televisions and set-top boxes
|
PC
|
24%
|
28%
|
30%
|
Microsoft Windows operating systems and DVD software players
|
Consumer Electronics
|
16%
|
19%
|
21%
|
DVD and Blu-ray Disc players and recorders, audio/video receivers, and home-theater-in-a-box systems
|
Mobile
|
12%
|
8%
|
7%
|
Smartphones, tablets and other mobile devices
|
Other
|
11%
|
11%
|
11%
|
Video game consoles, Automotive (in-car DVD players)
|
Total
|
100%
|
100%
|
100%
|
|
|
Fiscal Year Ended
|
||
Licensing Revenue
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Non-Optical
|
66%
|
57%
|
52%
|
Optical
|
34%
|
43%
|
48%
|
Goodwill, Intangible Assets, and Long-Lived Assets
|
|
Description
|
We test goodwill for impairment annually during our third fiscal quarter and whenever events or changes in circumstances indicate that the carrying amount may be impaired. Intangible assets with definite lives are amortized over their estimated useful lives. Our intangible assets principally consist of acquired technology, patents, trademarks, customer relationships and contracts, which are amortized on a straight-line basis over their useful lives ranging from three to seventeen years.
We review long-lived assets, including intangible assets, for impairment whenever events or a change in circumstances indicate that an asset’s carrying value may not be recoverable. Recoverability of an asset is measured by comparing its carrying value to the total future undiscounted cash flows that the asset is expected to generate. If it is determined that an asset is not recoverable, an impairment loss is recorded in the amount by which the carrying value of the asset exceeds its estimated fair value.
|
Judgments And Uncertainties
|
Beginning in the third quarter of fiscal 2012, we adopted the provisions of the FASB's recently issued accounting standard (ASU 2011-08) which permits the execution of a qualitative assessment as a determinant for whether the two-step annual goodwill impairment test should be performed. In performing our annual goodwill impairment test, we first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform a two-step goodwill test. In performing the qualitative assessment, we consider events and circumstances, including but not limited to, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, changes in management or key personnel, changes in strategy, changes in customers, changes in the composition or carrying amount of a reporting unit's net assets and changes in the price of our common stock. If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then the two-step goodwill impairment test is not performed.
If the two-step goodwill test is performed, we evaluate and test our goodwill for impairment at a reporting-unit level using expected future cash flows to be generated by the reporting unit. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting unit's goodwill over the calculated fair value of the goodwill. A reporting unit is an operating segment or one level below. |
Revenue Recognition
|
|
Description
|
We enter into revenue arrangements with our customers to license technologies, trademarks and know-how and to sell products and services. We recognize revenue when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been completed, the seller's price to the buyer is fixed or determinable and collectibility is probable.
|
Multiple-Element Arrangements
. Some of our revenue arrangements include multiple elements (“MEs”), such as hardware, software, maintenance and other services. We evaluate each element in a multiple element arrangement to determine whether it represents a separate unit of accounting. An element constitutes a separate unit of accounting when it has standalone value and delivery of an undelivered element is both probable and within our control. When these criteria are not met, the delivered and undelivered elements are combined and the arrangement fees are allocated to this combined single unit. If the unit separation criteria are met, we account for each element within a ME arrangement (such as hardware, software, maintenance and other services) separately, whereby the total arrangement fees are allocated to each element based on its relative selling price, which we establish using a selling price hierarchy. We determine the selling price of each element based on its vendor specific objective evidence (“VSOE”), if available, third party evidence (“TPE”), if VSOE is not available, or estimated selling price (“ESP”), if neither VSOE nor TPE is available.
|
|
For some arrangements, customers receive certain elements over a period of time, after delivery of the initial product. These elements may include support and maintenance and/or the right to receive upgrades. Revenue allocated to the undelivered element is recognized either over its estimated service period or when the upgrade is delivered. We do not recognize revenue that is contingent upon the future delivery of products or services or upon future performance obligations. We recognize revenue for delivered elements only when we have completed all contractual obligations.
|
|
We determine our ESP for an individual element within a ME revenue arrangement using the same methods used to determine the selling price of an element sold on a standalone basis. If we sell the element on a standalone basis, we estimate the selling price by considering actual sales prices. Otherwise, we estimate the selling price by considering internal factors such as pricing practices and margin objectives. Consideration is also given to market conditions such as competitor pricing.
|
|
We account for the majority of our digital cinema server and processor sales as ME arrangements that may include up to four separate units, or elements, of accounting.
1. The first element consists of our digital cinema server hardware and the accompanying software, which is essential to the functionality of the hardware. This element is typically delivered at the time of sale. 2. The second element is the right to receive support and maintenance, which is included with the purchase of the hardware element and is typically delivered over a service period subsequent to the initial sale. 3. The third element is the right to receive specified upgrades, which is included with the purchase of the hardware element and is typically delivered when a specified upgrade is available, subsequent to the initial sale. Under revenue recognition accounting standards, sales of our digital cinema servers typically result in the allocation of a substantial majority of the arrangement fees to the delivered hardware element based on its ESP, which we recognize as revenue at the time of sale once delivery has occurred. A small portion of the arrangement fees are allocated to the undelivered support and maintenance element, and in some cases to the undelivered specified upgrade element, based on the VSOE or ESP of each element. The portion of the arrangement fees allocated to the support and maintenance element are recognized as revenue ratably over the estimated service period, and the portion of the arrangement fees allocated to specified upgrades are recognized as revenue upon delivery of the upgrade. 4. The fourth element is the right to receive commissioning services performed solely in connection with our digital servers necessary for the installation of Dolby Atmos-enabled theatres. These services consist of the review of venue designs specifying proposed speaker placement, as well as calibration services performed for installed speakers to ensure optimal playback. A small portion of the arrangement fee is allocated to these services based on their ESP which we recognize as revenue once the services have been completed. |
|
Software Arrangements
. Revenue recognition for transactions that involve software, such as fees we earn from certain system licensees, may include multiple elements. For some of our ME arrangements, customers receive certain elements over a period of time or after delivery of the initial software. These elements may include support and maintenance. The fair values of these elements are recognized over the estimated period for which these elements will be delivered, which is sometimes the estimated life of the software. If we do not have VSOE of fair value for any undelivered element included in these ME arrangements for software, we defer revenue until all elements are delivered and/or services have been performed, or until we have VSOE of fair value for all remaining undelivered elements. If the undelivered element is support and we do not have fair value for the support element, revenue for the entire arrangement is bundled and recognized ratably over the support period.
In certain cases, our arrangements require the licensee to pay a fixed fee for units they may distribute in the future. These fees are generally recognized upon contract execution, unless the arrangement includes contingency terms or is considered a ME arrangement. |
|
Judgments And Uncertainties
|
Revenue recognition for transactions that may include multiple elements, such as fees we earn from certain system licensees, requires judgment in several possible areas including the following:
• Identifying the significant deliverables within the arrangements and determining whether the significant deliverables constitute separate units of accounting; • Timing of delivery or performance of service for the significant deliverables; • The assumptions and inputs used to determine selling price (whether vendor-specific objective evidence, third-party evidence, or estimated selling price) for the significant deliverables; • To the extent that customers receive certain elements of the arrangement over a period of time following initial delivery, as necessary, we estimate the period of time over which revenue is recognized; and • Whether collectibility is probable. We determine collectibility based on an evaluation of our customer's recent payment history, the existence of a standby letter of credit between the customer's financial institution and our financial institution, and other factors. |
Income Taxes
|
|
Description
|
We use the asset and liability method, under which deferred income tax assets and liabilities are determined based upon the difference between the financial statement carrying amounts and the tax bases of assets and liabilities and net operating loss carryforwards and tax credits are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed.
Our policy is to recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position is sustainable upon examination by tax authorities. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is additionally dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities and projected future taxable income in making this assessment. We record a valuation allowance to reduce our deferred tax assets when uncertainty regarding their realizability exists. We include interest and penalties related to gross unrecognized tax benefits within our provision for income taxes. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued are reduced in the period that such determination is made and are reflected as a reduction of the overall income tax provision. |
Judgments And Uncertainties
|
We make estimates and judgments that affect our accounting for income taxes. This includes estimating actual tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences, including the timing of the recognition of stock-based compensation expense, result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. We also assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent that we believe that recovery is not likely, we establish a valuation allowance.
Significant judgment is required in determining the provision for income taxes, the deferred tax asset and liability balances, the valuation allowance against our deferred tax assets and the reserve resulting from uncertainties in income tax positions. Our financial position and results of operations may be materially affected if actual results differ significantly from these estimates or if the estimates are adjusted in future periods. |
Investments
|
|
Description
|
Valuation. Our investments are recorded at fair value in our consolidated balance sheets. Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants at the measurement date. We evaluate our investment portfolio for credit losses and other-than-temporary impairments by comparing the fair value with the cost basis for each of our investment securities. An investment is impaired if the fair value is less than its cost basis. If any portion of the impairment is deemed to be the result of a credit loss, the credit loss portion of the impairment is included as a component of net income. If we deem it probable that we will not recover the full cost basis of the security, the security is other-than-temporarily impaired and the impairment loss is recognized as a component of net income. The degree to which estimates and judgment are used in determining fair value is generally dependent upon the market pricing information available for the investments, the availability of observable inputs and input from independent third parties, the frequency of trading in the investments, and the investment’s complexity. If different judgments regarding inputs were made, we could potentially reach different conclusions regarding the fair value of our investments.
Classification. All of our investments are classified as available-for-sale securities, with the exception of our investments held in our supplemental retirement plan, which are classified as trading securities. Investments that have an original maturity of 91 days or more at the date of purchase and a current maturity of less than one year are classified as short-term investments, while investments with a current maturity of more than one year are classified as long-term investments.
We classify our financial assets and liabilities measured at fair value using a three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that reflect the assumptions market participants would use in pricing the investment that are based on market data obtained from sources independent of the reporting entity, such as market quoted prices.
|
Judgments And Uncertainties
|
The degree to which estimates and judgment are used in determining fair value, is generally dependent upon the market pricing information available for the investments, the availability of observable inputs, the frequency of trading in the investments and the investment’s complexity. If different judgments regarding inputs were made, we could potentially reach different conclusions regarding the fair value of our investments.
GAAP establishes a three-level hierarchy prioritizing the observable inputs used in measuring the fair value of financial assets and liabilities as follows: the fair value hierarchy gives the highest priority to quoted prices in active markets that are accessible by us at the measurement date for identical investments, described as Level 1, and the lowest priority to valuation techniques using unobservable inputs, described as Level 3. We obtain the fair value of our Level 2 financial instruments from a professional pricing service, which may use quoted market prices for identical or comparable instruments. Fair value from this professional pricing source can also be based on pricing models whereby all significant inputs, including maturity dates, issue dates, settlement dates, benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers and other market related data, are observable or can be derived from or corroborated by observable market data for substantially the full term of the asset. |
Stock-Based Compensation
|
|
Description
|
We determine the expense for all employee stock-based compensation awards by estimating their fair value and recognizing that value as an expense, on a ratable basis, in our consolidated financial statements over the requisite service period in which our employees earn the awards. We use the Black-Scholes option pricing model to determine the fair value of employee stock options at the date of the grant.
|
Judgments And Uncertainties
|
To determine the fair value of a stock-based award using the Black-Scholes option pricing model, we make assumptions regarding the expected term of the award, the expected future volatility of our stock price over the expected term of the award, and the risk-free interest rate over the expected term of the award. We estimate the expected term of our stock-based awards by evaluating historical exercise patterns of our employees. We use a blend of the historical volatility of our common stock and the implied volatility of our traded options as an estimate of the expected volatility of our stock price over the expected term of the awards. We use an average interest rate based on U.S. Treasury instruments with terms consistent with the expected term of our awards to estimate the risk-free interest rate. We reduce the stock-based compensation expense for estimated forfeitures based on our historical experience. We are required to estimate forfeitures at the time of the grant and revise our estimate, if necessary, in subsequent periods if actual forfeitures differ from our estimate.
|
|
Fiscal Year Ended
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
|
$
|
%
|
|
$
|
%
|
Licensing
|
($ in thousands)
|
|
|
|
|
|
|
||
Revenue
|
$807,081
|
$801,313
|
$795,900
|
|
$5,768
|
1%
|
|
$5,413
|
1%
|
Percentage Of Total Revenue
|
89%
|
86%
|
83%
|
|
|
|
|
|
|
Cost Of Licensing
|
16,856
|
12,924
|
17,620
|
|
3,932
|
30%
|
|
(4,696)
|
(27)%
|
Gross Margin
|
790,225
|
788,389
|
778,280
|
|
1,836
|
—%
|
|
10,109
|
1%
|
Gross Margin Percentage
|
98%
|
98%
|
98%
|
|
|
|
|
|
|
Key Drivers
|
Revenue
|
Gross Margin
|
||
Mobile
|
á
|
Driven by higher shipments of smartphones that incorporate our technologies as well as the recognition of previously deferred tablet revenue
|
Although licensing gross margin percentage remained consistent at 98% from fiscal 2012 to fiscal 2013, cost of licensing increased over the comparative period, primarily due to an increase in fees paid to a third party resulting from increased royalty revenue and a $3.9 million charge recorded during fiscal 2013 in connection with certain revenue-sharing agreements
|
|
Broadcast
|
á
|
Driven by higher shipments of digital televisions and set-top boxes that incorporate our technologies
|
||
PC
|
â
|
Driven primarily by market declines of shipments
|
||
CE
|
â
|
Attributable to decreases in revenue from DVD and Blu-ray Disc devices
|
Key Drivers
|
Revenue
|
Gross Margin
|
||
Broadcast
|
á
|
Driven by higher shipments of digital televisions and set-top boxes that incorporate our technologies
|
Licensing gross margin remain unchanged from fiscal 2011 to fiscal 2012
|
|
Mobile
|
á
|
Driven by increases in sales of mobile and tablet devices that incorporate our technologies
|
||
CE
|
â
|
Attributable to decreases in revenue from DVD and Blu-ray Disc players
|
||
PC
|
â
|
Driven by decreased ISV media applications in PC shipments
|
|
Fiscal Year Ended
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
|
$
|
%
|
|
$
|
%
|
Products
|
($ in thousands)
|
|
|
|
|
|
|
||
Revenue
|
$80,603
|
$103,388
|
$131,611
|
|
$(22,785)
|
(22)%
|
|
$(28,223)
|
(21)%
|
Percentage Of Total Revenue
|
9%
|
11%
|
14%
|
|
|
|
|
|
|
Cost Of Products
|
64,270
|
66,325
|
81,328
|
|
(2,055)
|
(3)%
|
|
(15,003)
|
(18)%
|
Gross Margin
|
16,333
|
37,063
|
50,283
|
|
(20,730)
|
(56)%
|
|
(13,220)
|
(26)%
|
Gross Margin Percentage
|
20%
|
36%
|
38%
|
|
|
|
|
|
|
Key Drivers
|
Revenue
|
Gross Margin
|
||
Digital Cinema (Video)
|
â
|
The decrease in revenue from digital cinema video products was primarily due to lower unit shipments and average selling prices amid increased competition
|
â
|
Driven by a combination of lower average selling prices and increased unit standard costs on our highest-priced product
|
Film-Based Cinema
|
â
|
Driven by lower shipments resulting from the industry transition to digital cinema
|
á
|
Driven by lower unit standard costs in addition to higher average selling prices
|
Broadcast
|
â
|
Driven by lower shipments as our customers transition to software licensing solutions
|
á
|
Driven by higher average selling prices and unchanged or lower unit standard costs on our products.
|
Atmos
|
á
|
Driven by installations of the Dolby Atmos processor in theaters around the world and for which we began recognizing revenue in fiscal 2013
|
á
|
Driven by higher margins realized on installations of Dolby Atmos processors
|
Digital Cinema (Audio)
|
á
|
Driven by increased shipments of our digital cinema audio processors
|
â
|
Driven by lower average selling prices and higher unit standard costs
|
Other
|
|
No material fluctuations
|
â
|
Driven by $3.1 million higher discrete charges related to write-downs of excess inventory and unfavorable manufacturing overhead variances
|
Key Drivers
|
Revenue
|
Gross Margin
|
||
3D Products
|
â
|
Driven by lower shipments and lower average selling prices resulting from increased competition
|
â
|
Due to lower shipments and lower average selling prices
|
Film-Based Cinema
|
â
|
Driven by lower shipments and lower average selling prices as more exhibitors converted to digital cinema
|
â
|
Driven by lower average selling prices
|
Digital Cinema
|
|
No material fluctuations
|
â
|
Due to lower average selling prices
|
Broadcast
|
|
No material fluctuations
|
â
|
Due to lower shipments and lower average selling prices
|
Other
|
|
No material fluctuations
|
â
|
The decrease in products gross margin was further impacted by higher excess manufacturing capacity charges
|
á
|
The total decrease in products gross margin was partially offset by a decrease in discrete charges related to inventory valuation and other inventory adjustments
|
|
Fiscal Year Ended
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
|
$
|
%
|
|
$
|
%
|
Services
|
($ in thousands)
|
|
|
|
|
|
|
||
Revenue
|
$21,990
|
$28,313
|
$33,554
|
|
$(6,323)
|
(22)%
|
|
$(5,241)
|
(16)%
|
Percentage Of Total Revenue
|
2%
|
3%
|
3%
|
|
|
|
|
|
|
Cost Of Services
|
15,593
|
12,778
|
12,223
|
|
2,815
|
22%
|
|
555
|
5%
|
Gross Margin
|
6,397
|
15,535
|
21,331
|
|
(9,138)
|
(59)%
|
|
(5,796)
|
(27)%
|
Gross Margin Percentage
|
29%
|
55%
|
64%
|
|
|
|
|
|
|
Key Drivers
|
Revenue
|
Gross Margin
|
||
Film-based production services
|
â
|
Driven by declines in film-based production services consistent with the industry transition to digital cinema
|
â
|
Driven by a decrease in revenues from certain higher margin service offerings
|
Other
|
á
|
Driven by an increase in revenue from support and maintenance services that resulted from a higher volume of equipment in the field which are covered under our service programs
|
â
|
Driven by an increase in costs associated with exhibitor installations of Dolby Atmos equipment
|
Key Drivers
|
Revenue
|
Gross Margin
|
||
Film-based production services
|
â
|
Driven by declines in film-based production services consistent with the industry transition to digital cinema
|
â
|
Driven by a decrease in revenues from certain higher margin service offerings
|
Virtual print fees
|
â
|
Driven by a decrease in virtual print fees from certain leased digital cinema assets; this program was discontinued during fiscal 2012
|
|
No material fluctuations
|
Other
|
á
|
Driven by an increase in maintenance and support services
|
â
|
Due primarily to decreased revenues from certain higher margin service offerings
|
|
Fiscal Year Ended
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
|
$
|
%
|
|
$
|
%
|
|
($ in thousands)
|
|
|
|
|
|
|
||
Research and Development
|
$168,746
|
$140,143
|
$123,920
|
|
$28,603
|
20%
|
|
$16,223
|
13%
|
Percentage of total revenue
|
19%
|
15%
|
13%
|
|
|
|
|
|
|
Expense Category
|
Key Drivers
|
|
Compensation and benefits
|
á
|
Driven by increased headcount aimed at increasing the amount of new product offerings and solutions
|
Stock-based compensation
|
á
|
Driven by increased headcount and incremental expense related to equity award modifications that occurred following the special dividend made in the first quarter of fiscal 2013 (refer to footnote 6 for additional information)
|
Information technology
|
á
|
Driven by an increase in projects and activities aimed at developing new products and technologies
|
Product development
|
á
|
Expense Category
|
Key Drivers
|
|
Compensation and benefits
|
á
|
Driven by increased headcount
|
Information technology
|
á
|
Driven by an increase in the number of offices where research and development is conducted
|
Facilities and related costs
|
á
|
|
Prototypes
|
á
|
Driven by new Cinema and Professional Reference Monitor products
|
|
Fiscal Year Ended
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
|
$
|
%
|
|
$
|
%
|
|
($ in thousands)
|
|
|
|
|
|
|
||
Sales and Marketing
|
$231,103
|
$188,486
|
$155,202
|
|
$42,617
|
23%
|
|
$33,284
|
21%
|
Percentage of total revenue
|
25%
|
20%
|
16%
|
|
|
|
|
|
|
Expense Category
|
Key Drivers
|
|
Compensation and benefits
|
á
|
Driven by increased headcount as we expanded our sales and marketing efforts broadly across our target markets and related geographic locations
|
Travel-related expenses
|
á
|
|
Stock-based compensation
|
á
|
Driven by increased headcount and incremental expense related to equity award modifications that occurred following the special dividend made in the first quarter of fiscal 2013 (refer to footnote 6 for additional information)
|
Consulting and external labor costs
|
á
|
Driven by promotional events and expenses, including those associated with the launch of Dolby Atmos and our naming rights agreement for the Dolby Theatre
|
Marketing
|
á
|
|
Facilities and related costs
|
á
|
Driven by an increase in the number of offices and leasehold improvements at both new and existing locations where sales and marketing is conducted
|
Depreciation and amortization
|
á
|
Expense Category
|
Key Drivers
|
|
Compensation and benefits
|
á
|
Driven by increased headcount
|
Stock-based compensation
|
á
|
|
Consulting and external labor costs
|
á
|
Driven by promotional events and expenses, including those associated with our naming rights agreement for the Dolby Theatre and due to the launch of Dolby Atmos
|
Marketing
|
á
|
|
Facilities and related costs
|
á
|
Driven by an increase in the number of offices where sales and marketing is conducted
|
|
Fiscal Year Ended
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
|
$
|
%
|
|
$
|
%
|
|
($ in thousands)
|
|
|
|
|
|
|
||
General and Administrative
|
$161,970
|
$149,175
|
$137,633
|
|
$12,795
|
9%
|
|
$11,542
|
8%
|
Percentage of total revenue
|
18%
|
16%
|
14%
|
|
|
|
|
|
|
Expense Category
|
Key Drivers
|
|
Compensation and benefits
|
á
|
Driven by increased headcount
|
Stock-based compensation
|
á
|
Driven by increased headcount and incremental expense related to equity award modifications that occurred following the special dividend made in the first quarter of fiscal 2013 (refer to footnote 6 for additional information)
|
Legal and professional fees
|
á
|
Attributed to patent filings and other legal activities
|
Consulting and external labor costs
|
â
|
Due to conversions from consultants to full-time hires and lower volume of contracted resources
|
Expense Category
|
Key Drivers
|
|
Compensation and benefits
|
á
|
Driven by increased headcount
|
Professional fees
|
á
|
Attributed to patent filings and other legal activities
|
Depreciation expense
|
á
|
Related to implementation of information technology-related projects
|
Consulting and external labor costs
|
â
|
Decreases in contracted resources
|
|
Fiscal Year Ended
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
|
$
|
%
|
|
$
|
%
|
|
($ in thousands)
|
|
|
|
|
|
|
||
Restructuring
|
$5,874
|
$1,191
|
$3,406
|
|
$4,683
|
393%
|
|
$(2,215)
|
(65)%
|
Percentage of total revenue
|
1%
|
—%
|
—%
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
2013 vs. 2012
|
|
2012 vs. 2011
|
||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
|
$
|
%
|
|
$
|
%
|
Other Income/(Expense)
|
($ in thousands)
|
|
|
|
|
|
|
||
Interest income
|
$3,848
|
$6,411
|
$8,976
|
|
$(2,563)
|
(40)%
|
|
$(2,565)
|
(29)%
|
Interest expense
|
(575)
|
(196)
|
1,027
|
|
(379)
|
193%
|
|
(1,223)
|
(119)%
|
Other income, net
|
2,111
|
784
|
907
|
|
1,327
|
169%
|
|
(123)
|
(14)%
|
Total other income, net
|
$5,384
|
$6,999
|
$10,910
|
|
$(1,615)
|
(23)%
|
|
$(3,911)
|
(36)%
|
Expense Category
|
Key Drivers
|
|
Interest income
|
â
|
Attributed to lower average investment portfolio balances following the payment of a $408.2 million special dividend in the first quarter of fiscal 2013 in addition to lower average interest rates
|
Interest expense
|
á
|
Attributed to accrued interest recorded on a patent obligation
|
Other income/(expense)
|
á
|
Realized gains on the sale of investment securities and the recognition of the accumulated currency translation adjustment balance of a foreign subsidiary into income following its dissolution in fiscal 2013
|
Expense Category
|
Key Drivers
|
|
Interest income
|
â
|
Due to a decrease in cash, cash equivalents and investment balances, in aggregate, compared to fiscal 2011 and lower average interest rates on our investments
|
Interest expense
|
á
|
Increase as interest expense in fiscal 2011 included the impact of the reversal of interest expense related to the release of VAT reserves
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
|
($ in thousands)
|
||
Provision for income taxes
|
$(60,344)
|
$(103,857)
|
$(130,061)
|
Effective tax rate
|
24%
|
28%
|
30%
|
Factor
|
Impact On Effective Tax Rate
|
|
Reinstatement of Federal R&D Tax Credits
|
â
|
Our effective tax rate in fiscal 2013 reflects the benefit from an increase in federal research and development tax credits in fiscal 2013 as compared to fiscal 2012 resulting from a change in the tax law in January 2013. This change retroactively reinstated these credits for a portion of fiscal 2012
|
Foreign Operations Reorganization
|
â
|
In fiscal 2013, we reorganized the operations of certain foreign subsidiaries associated with previous acquisitions. The reorganizations resulted in the release of $7.4 million in deferred tax liabilities representing accrued domestic taxes and amortization of intangible assets, which benefited our effective tax rate for fiscal 2013 by 3%
|
Factor
|
Impact On Effective Tax Rate
|
|
Indefinite reinvest election (undistributed earnings)
|
â
|
Our effective tax rate in fiscal 2012 reflects the additional benefits from our election in fiscal 2011 to begin indefinitely reinvesting a portion of our undistributed earnings in certain foreign subsidiaries
|
Change in California state apportionment sourcing rules
|
â
|
We benefited from a change in the State of California apportionment sourcing rules, which began to affect our current California taxes beginning in the first quarter of fiscal 2012
|
Expiration of Federal R&D Tax Credits
|
á
|
The expiration of the federal research and development tax credits, beginning January 1, 2012, resulted in an increase in our effective tax rate
|
|
September 27,
2013 |
September 28,
2012 |
|
(in thousands)
|
|
Cash and cash equivalents
|
$454,397
|
$492,600
|
Short-term investments
|
140,267
|
302,693
|
Long-term investments
|
306,338
|
361,614
|
Accounts receivable, net
|
97,460
|
43,495
|
Accounts payable and accrued liabilities
|
148,490
|
130,923
|
Working capital
(1)
|
639,907
|
813,446
|
|
|
|
|
Fiscal Year Ended
|
|
|
September 27,
2013 |
September 28,
2012 |
|
(in thousands)
|
|
Net cash provided by operating activities
|
$274,661
|
$389,797
|
Capital expenditures
|
(26,711)
|
(167,349)
|
Repurchase of common stock
|
(82,245)
|
(268,203)
|
Net cash provided by/(used in) investing activities
|
176,865
|
(194,679)
|
Net cash used in financing activities
|
(487,964)
|
(254,318)
|
(1)
|
Working capital consists of total current assets less total current liabilities.
|
Factor
|
Impact On Cash Flows
|
|
Net Income
|
â
|
A decrease in net income
|
Changes in operating assets and liabilities
|
â
|
Decreased resulting from increases in current assets exceeding decreases in current liabilities largely due to an increase in accounts receivable primarily due to timing differences
|
Factor
|
Impact On Cash Flows
|
|
Sale of marketable securities
|
á
|
An increase in proceeds received from the sale of available-for-sale securities as these securities were sold in part to fund the payment of a $408.2 million special dividend made in the first quarter of fiscal 2013
|
Capital expenditures
|
á
|
Increased as less capital expenditures were made in fiscal 2013 compared to fiscal 2012 when the building to be used as our new headquarters was acquired
|
Purchases of marketable securities
|
á
|
Increased as we purchased less available-for-sale securities in fiscal 2013 following the payment of a $408.2 million special dividend made in the first quarter of fiscal 2013
|
Proceeds from maturities of securities
|
â
|
Decreased due to a lower volume of proceeds from maturities
|
Factor
|
Impact On Cash Flows
|
|
Dividend
|
â
|
Due to the payment of a special dividend to holders of our Class A and Class B common stock
|
Share repurchases
|
á
|
Fewer share repurchases of our Class A common stock in fiscal 2013 compared to fiscal 2012
|
Distributions
|
â
|
Due to an increase in distributions made to our controlling interest in fiscal 2013
|
|
Payments Due By Period
|
||||
|
1 Year
|
2 - 3
Years |
4 - 5
Years |
More Than
5 Years |
Total
|
Naming rights
|
$7,341
|
$14,957
|
$15,334
|
$118,699
|
$156,331
|
Operating leases
|
17,094
|
15,530
|
7,276
|
3,028
|
42,928
|
Purchase obligations
|
4,261
|
1,542
|
39
|
—
|
5,842
|
Total
|
$28,696
|
$32,029
|
$22,649
|
$121,727
|
$205,101
|
|
|
|
September 27,
2013 |
September 28,
2012 |
||||
ASSETS
|
|
|
||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
454,397
|
|
$
|
492,600
|
|
Short-term investments
|
140,267
|
|
302,693
|
|
||
Accounts receivable, net of allowance of $514 at September 27, 2013 and $956 at September 28, 2012
|
97,460
|
|
43,495
|
|
||
Inventories
|
10,093
|
|
16,700
|
|
||
Deferred taxes
|
78,381
|
|
80,966
|
|
||
Prepaid expenses and other current assets
|
32,124
|
|
33,832
|
|
||
Total current assets
|
812,722
|
|
970,286
|
|
||
Long-term investments
|
306,338
|
|
361,614
|
|
||
Property, plant and equipment, net
|
242,917
|
|
254,676
|
|
||
Intangible assets, net
|
41,315
|
|
56,526
|
|
||
Goodwill
|
279,724
|
|
281,375
|
|
||
Deferred taxes
|
43,291
|
|
22,634
|
|
||
Other non-current assets
|
11,638
|
|
13,687
|
|
||
Total assets
|
$
|
1,737,945
|
|
$
|
1,960,798
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
||||
Current liabilities:
|
|
|
||||
Accounts payable
|
$
|
10,695
|
|
$
|
14,831
|
|
Accrued liabilities
|
137,795
|
|
116,092
|
|
||
Income taxes payable
|
3,394
|
|
2,424
|
|
||
Deferred revenue
|
20,931
|
|
23,493
|
|
||
Total current liabilities
|
172,815
|
|
156,840
|
|
||
Long-term deferred revenue
|
19,663
|
|
18,192
|
|
||
Deferred taxes
|
—
|
|
2,696
|
|
||
Other non-current liabilities
|
45,441
|
|
39,837
|
|
||
Total liabilities
|
237,919
|
|
217,565
|
|
||
Stockholders’ equity:
|
|
|
||||
Class A common stock, $0.001 par value, one vote per share, 500,000,000 shares authorized: 46,862,893 shares issued and outstanding at September 27, 2013 and 46,496,635 at September 28, 2012
|
47
|
|
46
|
|
||
Class B common stock, $0.001 par value, ten votes per share, 500,000,000 shares authorized: 54,876,494 shares issued and outstanding at September 27, 2013 and 56,598,829 at September 28, 2012
|
55
|
|
57
|
|
||
Additional paid-in capital
|
18,812
|
|
—
|
|
||
Retained earnings
|
1,454,382
|
|
1,709,479
|
|
||
Accumulated other comprehensive income
|
7,814
|
|
10,687
|
|
||
Total stockholders’ equity – Dolby Laboratories, Inc.
|
1,481,110
|
|
1,720,269
|
|
||
Controlling interest
|
18,916
|
|
22,964
|
|
||
Total stockholders’ equity
|
1,500,026
|
|
1,743,233
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,737,945
|
|
$
|
1,960,798
|
|
|
Fiscal Year Ended
|
||||||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
||||||
Revenue:
|
|
|
|
||||||
Licensing
|
$
|
807,081
|
|
$
|
801,313
|
|
$
|
795,900
|
|
Products
|
80,603
|
|
103,388
|
|
131,611
|
|
|||
Services
|
21,990
|
|
28,313
|
|
33,554
|
|
|||
Total revenue
|
909,674
|
|
933,014
|
|
961,065
|
|
|||
Cost of revenue:
|
|
|
|
||||||
Cost of licensing
|
16,856
|
|
12,924
|
|
17,620
|
|
|||
Cost of products
|
64,270
|
|
66,325
|
|
81,328
|
|
|||
Cost of services
|
15,593
|
|
12,778
|
|
12,223
|
|
|||
Total cost of revenue
|
96,719
|
|
92,027
|
|
111,171
|
|
|||
Gross margin
|
812,955
|
|
840,987
|
|
849,894
|
|
|||
Operating expenses:
|
|
|
|
||||||
Research and development
|
168,746
|
|
140,143
|
|
123,920
|
|
|||
Sales and marketing
|
231,103
|
|
188,486
|
|
155,202
|
|
|||
General and administrative
|
161,970
|
|
149,175
|
|
137,633
|
|
|||
Restructuring charges
|
5,874
|
|
1,191
|
|
3,406
|
|
|||
Total operating expenses
|
567,693
|
|
478,995
|
|
420,161
|
|
|||
Operating income
|
245,262
|
|
361,992
|
|
429,733
|
|
|||
Interest income
|
3,848
|
|
6,411
|
|
8,976
|
|
|||
Interest expense
|
(575
|
)
|
(196
|
)
|
1,027
|
|
|||
Other income, net
|
2,111
|
|
784
|
|
907
|
|
|||
Income before income taxes
|
250,646
|
|
368,991
|
|
440,643
|
|
|||
Provision for income taxes
|
(60,344
|
)
|
(103,857
|
)
|
(130,061
|
)
|
|||
Net income including controlling interest
|
190,302
|
|
265,134
|
|
310,582
|
|
|||
Less: net (income) attributable to controlling interest
|
(1,031
|
)
|
(832
|
)
|
(1,315
|
)
|
|||
Net income attributable to Dolby Laboratories, Inc.
|
$
|
189,271
|
|
$
|
264,302
|
|
$
|
309,267
|
|
Net income per share:
|
|
|
|
||||||
Basic
|
$
|
1.86
|
|
$
|
2.47
|
|
$
|
2.78
|
|
Diluted
|
$
|
1.84
|
|
$
|
2.46
|
|
$
|
2.75
|
|
Weighted-average shares outstanding:
|
|
|
|
||||||
Basic
|
101,879
|
|
106,926
|
|
111,444
|
|
|||
Diluted
|
102,788
|
|
107,541
|
|
112,554
|
|
|||
|
|
|
|
||||||
Related party rent expense included in operating expenses
|
$
|
2,526
|
|
$
|
1,372
|
|
$
|
1,372
|
|
Related party rent expense included in net income attributable to controlling interest
|
$
|
3,636
|
|
$
|
3,270
|
|
$
|
3,098
|
|
|
Fiscal Year Ended
|
||||||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
||||||
Net income including controlling interest
|
$
|
190,302
|
|
$
|
265,134
|
|
$
|
310,582
|
|
Other comprehensive income/(loss):
|
|
|
|
||||||
Foreign currency translation adjustments, net of tax
|
(2,037
|
)
|
3,082
|
|
509
|
|
|||
Unrealized gains/(losses) on available-for-sale securities, net of tax
|
(876
|
)
|
380
|
|
(907
|
)
|
|||
Comprehensive income
|
187,389
|
|
268,596
|
|
310,184
|
|
|||
Less: comprehensive (income) attributable to controlling interest
|
(991
|
)
|
(1,140
|
)
|
(1,185
|
)
|
|||
Comprehensive income attributable to Dolby Laboratories, Inc.
|
$
|
186,398
|
|
$
|
267,456
|
|
$
|
308,999
|
|
|
Dolby Laboratories, Inc.
|
|
|
|||||||||||||||||||||||||
|
Shares of
Class A
common
stock
|
Class A
common
stock
|
Shares of
Class B
common
stock
|
Class B
common
stock
|
Additional
paid-in
capital
|
Retained
earnings
|
Accumulated
other
comprehensive
income
|
Total Dolby
Laboratories,
Inc.
|
Controlling
Interest
|
Total
|
||||||||||||||||||
Balance at September 24, 2010
|
52,856
|
|
$
|
53
|
|
59,228
|
|
$
|
59
|
|
$
|
329,902
|
|
$
|
1,135,922
|
|
$
|
7,801
|
|
$
|
1,473,737
|
|
$
|
20,942
|
|
$
|
1,494,679
|
|
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
309,267
|
|
—
|
|
309,267
|
|
1,315
|
|
310,582
|
|
||||||||
Translation adjustments, net of tax of $2
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
639
|
|
639
|
|
(130
|
)
|
509
|
|
||||||||
Unrealized losses on available-for-sale securities, net of tax of $599
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(907
|
)
|
(907
|
)
|
—
|
|
(907
|
)
|
||||||||
Distributions to controlling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(290
|
)
|
(290
|
)
|
||||||||
Stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
43,218
|
|
—
|
|
—
|
|
43,218
|
|
—
|
|
43,218
|
|
||||||||
Capitalized stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
635
|
|
—
|
|
—
|
|
635
|
|
—
|
|
635
|
|
||||||||
Repurchase of common stock
|
(4,135
|
)
|
(4
|
)
|
—
|
|
—
|
|
(192,406
|
)
|
—
|
|
—
|
|
(192,410
|
)
|
—
|
|
(192,410
|
)
|
||||||||
Tax benefit/(deficiency) from stock incentive plans
|
—
|
|
—
|
|
—
|
|
—
|
|
6,015
|
|
—
|
|
—
|
|
6,015
|
|
—
|
|
6,015
|
|
||||||||
Class A common stock issued under employee stock plans
|
1,079
|
|
1
|
|
—
|
|
—
|
|
26,786
|
|
—
|
|
—
|
|
26,787
|
|
—
|
|
26,787
|
|
||||||||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(86
|
)
|
—
|
|
—
|
|
—
|
|
(4,599
|
)
|
—
|
|
—
|
|
(4,599
|
)
|
—
|
|
(4,599
|
)
|
||||||||
Common stock transfers - Class B to Class A
|
2,147
|
|
2
|
|
(2,147
|
)
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Exercise of Class B stock options
|
—
|
|
—
|
|
479
|
|
1
|
|
1,130
|
|
—
|
|
—
|
|
1,131
|
|
—
|
|
1,131
|
|
||||||||
Balance at September 30, 2011
|
51,861
|
|
52
|
|
57,560
|
|
58
|
|
210,681
|
|
1,445,189
|
|
7,533
|
|
1,663,513
|
|
21,837
|
|
1,685,350
|
|
||||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
264,302
|
|
—
|
|
264,302
|
|
832
|
|
265,134
|
|
||||||||
Translation adjustments, net of tax of $30
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,774
|
|
2,774
|
|
308
|
|
3,082
|
|
||||||||
Unrealized gains on available-for-sale securities, net of tax of $(210)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
380
|
|
380
|
|
—
|
|
380
|
|
||||||||
Distributions to controlling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(13
|
)
|
(13
|
)
|
||||||||
Stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
47,184
|
|
—
|
|
—
|
|
47,184
|
|
—
|
|
47,184
|
|
||||||||
Capitalized stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
352
|
|
—
|
|
—
|
|
352
|
|
—
|
|
352
|
|
||||||||
Repurchase of common stock
|
(7,213
|
)
|
(7
|
)
|
—
|
|
—
|
|
(268,184
|
)
|
(12
|
)
|
—
|
|
(268,203
|
)
|
—
|
|
(268,203
|
)
|
||||||||
Tax benefit/(deficiency) from stock incentive plans
|
—
|
|
—
|
|
—
|
|
—
|
|
(3,585
|
)
|
—
|
|
—
|
|
(3,585
|
)
|
—
|
|
(3,585
|
)
|
||||||||
Class A common stock issued under employee stock plans
|
911
|
|
—
|
|
—
|
|
—
|
|
17,279
|
|
—
|
|
—
|
|
17,279
|
|
—
|
|
17,279
|
|
||||||||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(106
|
)
|
—
|
|
—
|
|
—
|
|
(3,835
|
)
|
—
|
|
—
|
|
(3,835
|
)
|
—
|
|
(3,835
|
)
|
||||||||
Common stock transfers - Class B to Class A
|
1,044
|
|
1
|
|
(1,044
|
)
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Exercise of Class B stock options
|
—
|
|
—
|
|
83
|
|
—
|
|
108
|
|
—
|
|
—
|
|
108
|
|
—
|
|
108
|
|
||||||||
Balance at September 28, 2012
|
46,497
|
|
46
|
|
56,599
|
|
57
|
|
$
|
—
|
|
1,709,479
|
|
10,687
|
|
1,720,269
|
|
22,964
|
|
1,743,233
|
|
|||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
189,271
|
|
—
|
|
189,271
|
|
1,031
|
|
190,302
|
|
||||||||
Translation adjustments, net of tax of $497
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,997
|
)
|
(1,997
|
)
|
(40
|
)
|
(2,037
|
)
|
||||||||
Unrealized losses on available-for-sale securities, net of tax of $493
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(876
|
)
|
(876
|
)
|
—
|
|
(876
|
)
|
||||||||
Distributions to controlling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(5,039
|
)
|
(5,039
|
)
|
||||||||
Stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
64,328
|
|
—
|
|
—
|
|
64,328
|
|
—
|
|
64,328
|
|
||||||||
Repurchase of common stock
|
(2,557
|
)
|
(2
|
)
|
—
|
|
—
|
|
(46,081
|
)
|
(36,162
|
)
|
—
|
|
(82,245
|
)
|
—
|
|
(82,245
|
)
|
||||||||
Cash dividends declared and paid on common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(408,206
|
)
|
—
|
|
(408,206
|
)
|
—
|
|
(408,206
|
)
|
||||||||
Tax benefit/(deficiency) from stock incentive plans
|
—
|
|
—
|
|
—
|
|
—
|
|
(6,564
|
)
|
—
|
|
—
|
|
(6,564
|
)
|
—
|
|
(6,564
|
)
|
||||||||
Class A common stock issued under employee stock plans
|
1,380
|
|
1
|
|
—
|
|
—
|
|
15,601
|
|
—
|
|
—
|
|
15,602
|
|
—
|
|
15,602
|
|
||||||||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(263
|
)
|
—
|
|
—
|
|
—
|
|
(8,828
|
)
|
—
|
|
—
|
|
(8,828
|
)
|
—
|
|
(8,828
|
)
|
||||||||
Common stock transfers - Class B to Class A
|
1,806
|
|
2
|
|
(1,806
|
)
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Exercise of Class B stock options
|
—
|
|
—
|
|
83
|
|
—
|
|
356
|
|
—
|
|
—
|
|
356
|
|
—
|
|
356
|
|
||||||||
Balance at September 27, 2013
|
46,863
|
|
$
|
47
|
|
54,876
|
|
$
|
55
|
|
$
|
18,812
|
|
$
|
1,454,382
|
|
$
|
7,814
|
|
$
|
1,481,110
|
|
$
|
18,916
|
|
$
|
1,500,026
|
|
|
Fiscal Year Ended
|
||||||||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
||||||
Operating activities:
|
|
|
|||||||
Net income including controlling interest
|
$
|
190,302
|
|
$
|
265,134
|
|
$
|
310,582
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
53,245
|
|
43,876
|
|
43,994
|
|
|||
Stock-based compensation
|
64,328
|
|
47,581
|
|
43,665
|
|
|||
Amortization of premium on investments
|
10,234
|
|
17,140
|
|
17,088
|
|
|||
Excess tax benefit from exercise of stock options
|
(475
|
)
|
(852
|
)
|
(6,593
|
)
|
|||
Provision for doubtful accounts
|
(174
|
)
|
(379
|
)
|
772
|
|
|||
Deferred income taxes
|
(19,642
|
)
|
1,208
|
|
6,784
|
|
|||
Loss on impairment of long-lived assets
|
—
|
|
275
|
|
226
|
|
|||
Payment on litigation settlement
|
—
|
|
—
|
|
(3,000
|
)
|
|||
Other non-cash items affecting net income
|
(1,026
|
)
|
95
|
|
532
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
||||||
Accounts receivable
|
(53,639
|
)
|
18,831
|
|
(8,514
|
)
|
|||
Inventories
|
9,166
|
|
3,051
|
|
2,105
|
|
|||
Prepaid expenses and other assets
|
3,891
|
|
(4,108
|
)
|
(10,305
|
)
|
|||
Accounts payable and other liabilities
|
21,890
|
|
(6,641
|
)
|
(16,952
|
)
|
|||
Income taxes, net
|
2,314
|
|
3,866
|
|
708
|
|
|||
Deferred revenue
|
(1,076
|
)
|
(498
|
)
|
19,800
|
|
|||
Other non-current liabilities
|
(4,677
|
)
|
1,218
|
|
2,796
|
|
|||
Net cash provided by operating activities
|
274,661
|
|
389,797
|
|
403,688
|
|
|||
Investing activities:
|
|
|
|
||||||
Purchases of available-for-sale securities
|
(482,370
|
)
|
(611,211
|
)
|
(619,238
|
)
|
|||
Proceeds from sales of available-for-sale securities
|
548,739
|
|
358,142
|
|
225,977
|
|
|||
Proceeds from maturities of available-for-sale securities
|
143,754
|
|
236,535
|
|
203,704
|
|
|||
Purchases of property, plant and equipment
|
(26,711
|
)
|
(167,349
|
)
|
(47,362
|
)
|
|||
Acquisitions, net of cash acquired
|
—
|
|
(12,521
|
)
|
(3,350
|
)
|
|||
Other investments
|
(3,000
|
)
|
—
|
|
—
|
|
|||
Purchases of intangible assets
|
(4,050
|
)
|
(350
|
)
|
—
|
|
|||
Proceeds from sales of property, plant and equipment and assets held for sale
|
503
|
|
2,075
|
|
3,567
|
|
|||
Net cash provided by/(used in) investing activities
|
176,865
|
|
(194,679
|
)
|
(236,702
|
)
|
|||
Financing activities:
|
|
|
|
||||||
Payments on debt
|
(79
|
)
|
(518
|
)
|
—
|
|
|||
Proceeds from issuance of common stock
|
15,958
|
|
17,386
|
|
27,918
|
|
|||
Repurchase of common stock
|
(82,245
|
)
|
(268,203
|
)
|
(192,410
|
)
|
|||
Payment of cash dividend
|
(408,206
|
)
|
—
|
|
—
|
|
|||
Distribution to controlling interest
|
(5,039
|
)
|
—
|
|
—
|
|
|||
Excess tax benefit from the exercise of stock options
|
475
|
|
852
|
|
6,593
|
|
|||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(8,828
|
)
|
(3,835
|
)
|
(4,599
|
)
|
|||
Net cash used in financing activities
|
(487,964
|
)
|
(254,318
|
)
|
(162,498
|
)
|
|||
Effect of foreign exchange rate changes on cash and cash equivalents
|
(1,765
|
)
|
288
|
|
1,163
|
|
|||
Net increase/(decrease) in cash and cash equivalents
|
(38,203
|
)
|
(58,912
|
)
|
5,651
|
|
|||
Cash and cash equivalents at beginning of period
|
492,600
|
|
551,512
|
|
545,861
|
|
|||
Cash and cash equivalents at end of period
|
$
|
454,397
|
|
$
|
492,600
|
|
$
|
551,512
|
|
|
|
|
|
||||||
Supplemental disclosure:
|
|
|
|
||||||
Cash paid for income taxes, net of refunds received
|
$
|
77,701
|
|
$
|
98,497
|
|
$
|
122,531
|
|
Cash paid for interest
|
$
|
66
|
|
$
|
133
|
|
$
|
375
|
|
Non-cash investing activities:
|
|
|
|
||||||
Purchase consideration payable for acquisition
|
$
|
—
|
|
$
|
6,038
|
|
$
|
—
|
|
PP&E Category
|
Useful Life (Depreciable Base)
|
Systems and software
|
3 to 5 years
|
Machinery and equipment
|
3 to 8 years
|
Furniture and fixtures
|
5 to 8 years
|
Leasehold improvements
|
Lesser of useful life or related lease term
|
Buildings
|
Up to 40 years
|
▪
|
The first element consists of our digital cinema server hardware and the accompanying software, which is essential to the functionality of the hardware. This element is typically delivered at the time of sale.
|
▪
|
The second element is the right to receive support and maintenance, which is included with the purchase of the hardware element and is typically delivered over a service period subsequent to the initial sale.
|
▪
|
The third element is the right to receive specified upgrades, which is included with the purchase of the hardware element and is typically delivered when a specified upgrade is available, subsequent to the initial sale. Under revenue recognition accounting standards, sales of our digital cinema servers typically result in the allocation of a substantial majority of the arrangement fees to the delivered hardware element based on its ESP, which we recognize as revenue at the time of sale once delivery has occurred. A small portion of the arrangement fee is allocated to the undelivered support and maintenance element, and in some cases, to the undelivered specified upgrade element based on the VSOE or ESP of each element. The portion of the arrangement fees allocated to the support and maintenance element are recognized as revenue ratably over the estimated service period, and the portion of the arrangement fees allocated to specified upgrades are recognized as revenue upon delivery of the upgrade.
|
▪
|
The fourth element is the right to receive commissioning services performed solely in connection with our digital servers necessary for the installation of Dolby Atmos-enabled theatres. These services consist of the review of venue designs specifying proposed speaker placement, as well as calibration services performed for installed speakers to ensure optimal playback. A small portion of the arrangement fee is allocated to these services based on their ESP which we recognize as revenue once the services have been completed.
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Advertising and promotional costs
|
$32,834
|
$19,971
|
$13,600
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Foreign currency transaction gains
|
$73
|
$193
|
$267
|
|
September 27,
2013 |
September 28,
2012 |
Cash and cash equivalents:
|
|
|
Cash
|
$420,069
|
$468,622
|
Cash equivalents:
|
|
|
Money market funds
|
16,193
|
17,090
|
U.S. agency securities
|
13,135
|
—
|
Commercial paper
|
5,000
|
4,885
|
Municipal debt securities
|
—
|
2,003
|
Total cash and cash equivalents
|
454,397
|
492,600
|
Short-term investments:
|
|
|
U.S. agency securities
|
6,007
|
3,999
|
Commercial paper
|
5,991
|
19,414
|
Corporate bonds
|
43,847
|
107,243
|
Municipal debt securities
|
84,422
|
172,037
|
Total short-term investments
|
140,267
|
302,693
|
Long-term investments
(1)
:
|
|
|
U.S. agency securities
|
40,924
|
21,013
|
Corporate bonds
|
90,391
|
112,993
|
Municipal debt securities
|
172,023
|
227,608
|
Other long-term investments
(2)
|
3,000
|
—
|
Total long-term investments
|
306,338
|
361,614
|
Total cash, cash equivalents and investments
|
$901,002
|
$1,156,907
|
(1)
|
Our long-term investments have maturities that range from
one
to
three
years.
|
(2)
|
Other long-term investments include a
$3.0 million
investment, which is accounted for under the cost method of accounting. After conducting an impairment assessment, we concluded that no indicators of other-than-temporary impairment exist as of
September 27, 2013
.
|
(1)
|
Our investment portfolio of cash equivalents and investments excludes our
$3.0 million
cost method investment.
|
|
September 27, 2013
|
|||||
|
Less than 12 months
|
12 months or greater
|
Total
|
|||
|
Fair Value
|
Gross Unrealized Losses
|
Fair Value
|
Gross Unrealized Losses
|
Fair Value
|
Gross Unrealized Losses
|
U.S. agency securities
|
$21,407
|
$(76)
|
$—
|
$—
|
$21,407
|
$(76)
|
Corporate bonds
|
53,350
|
(174)
|
—
|
—
|
53,350
|
(174)
|
Municipal debt securities
|
72,485
|
(157)
|
—
|
—
|
72,485
|
(157)
|
Total
|
$147,242
|
$(407)
|
$—
|
$—
|
$147,242
|
$(407)
|
|
September 28, 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
|
U.S. agency securities
|
$6,999
|
$(3)
|
$—
|
$—
|
$6,999
|
$(3)
|
Corporate bonds
|
25,277
|
(19)
|
—
|
—
|
25,277
|
(19)
|
Municipal debt securities
|
87,705
|
(37)
|
5,565
|
(1)
|
93,270
|
(38)
|
Total
|
$119,981
|
$(59)
|
$5,565
|
$(1)
|
$125,546
|
$(60)
|
|
September 27,
2013 |
September 28,
2012 |
Trade accounts receivable
|
$86,823
|
$43,565
|
Accounts receivable related to patent administration program
|
11,151
|
886
|
Accounts receivable, gross
|
97,974
|
44,451
|
Less: allowance for doubtful accounts
|
(514)
|
(956)
|
Accounts receivable, net
|
$97,460
|
$43,495
|
Allowance for Doubtful Accounts
|
Balance at
Beginning of
Fiscal Year
|
Charged to
Operations
|
Deductions
|
Balance at
End of
Fiscal Year
|
For fiscal year ended September 30, 2011
|
$2,040
|
$772
|
$(346)
|
$2,466
|
For fiscal year ended September 28, 2012
|
2,466
|
(379)
|
(1,131)
|
956
|
For fiscal year ended September 27, 2013
|
956
|
(174)
|
(268)
|
514
|
|
September 27,
2013 |
September 28,
2012 |
Raw materials
|
$2,050
|
$4,403
|
Finished goods
|
8,043
|
12,297
|
Inventories
|
$10,093
|
$16,700
|
|
September 27,
2013 |
September 28,
2012 |
Prepaid expenses
|
$10,195
|
$14,955
|
Other current assets
|
14,038
|
13,165
|
Income tax receivable
|
7,891
|
5,712
|
Prepaid expenses and other current assets
|
$32,124
|
$33,832
|
|
September 27,
2013 |
September 28,
2012 |
Land
|
$46,049
|
$48,227
|
Buildings
|
32,305
|
27,266
|
Leasehold improvements
|
64,991
|
68,352
|
Machinery and equipment
|
38,408
|
29,070
|
Computer systems and software
|
91,939
|
86,266
|
Furniture and fixtures
|
13,490
|
13,158
|
Construction in progress
|
88,872
|
79,965
|
|
376,054
|
352,304
|
Less: accumulated depreciation
|
(133,137)
|
(97,628)
|
Property, plant and equipment, net
|
$242,917
|
$254,676
|
|
Goodwill
|
Balance at September 30, 2011
|
$263,260
|
Acquired goodwill
|
15,988
|
Translation adjustments
|
2,127
|
Balance at September 28, 2012
|
$281,375
|
Translation adjustments
|
(1,651)
|
Balance at September 27 2013
|
$279,724
|
|
September 27, 2013
|
|
September 28, 2012
|
||||
|
Cost
|
Accumulated
Amortization
|
Net
|
|
Cost
|
Accumulated
Amortization
|
Net
|
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
Acquired patents and technology
|
$79,925
|
$(51,267)
|
$28,658
|
|
$79,213
|
$(40,071)
|
$39,142
|
Customer relationships
|
30,723
|
(19,592)
|
11,131
|
|
30,679
|
(16,386)
|
14,293
|
Other intangibles
|
20,992
|
(19,466)
|
1,526
|
|
20,925
|
(17,834)
|
3,091
|
Intangible assets, net
|
$131,640
|
$(90,325)
|
$41,315
|
|
$130,817
|
$(74,291)
|
$56,526
|
Fiscal Year
|
Amortization Expense
|
2014
|
$13,735
|
2015
|
11,275
|
2016
|
9,095
|
2017
|
5,958
|
2018
|
758
|
Thereafter
|
494
|
Total
|
$41,315
|
|
September 27,
2013 |
September 28,
2012 |
Accrued royalties
|
$6,075
|
$2,391
|
Amounts payable to joint licensing program partners
|
40,091
|
35,492
|
Accrued compensation and benefits
|
54,423
|
47,331
|
Accrued professional fees
|
4,402
|
4,893
|
Other accrued liabilities
|
32,804
|
25,985
|
Accrued liabilities
|
$137,795
|
$116,092
|
|
September 27,
2013 |
September 28,
2012 |
Supplemental retirement plan obligations
|
$2,144
|
$2,042
|
Non-current tax liabilities
|
30,986
|
20,862
|
Other liabilities
|
12,311
|
16,933
|
Other non-current liabilities
|
$45,441
|
$39,837
|
|
Fiscal Year Ended
|
|
|
September 27,
2013 |
September 28,
2012 |
Foreign currency translation gains, net of tax of ($2,126) and ($2,623)
|
$7,611
|
$9,608
|
Unrealized gains on available-for-sale securities, net of tax of ($104) and ($597)
|
203
|
1,079
|
Total accumulated other comprehensive income
|
$7,814
|
$10,687
|
|
Purchase Price Allocation
|
Current assets
|
$1,289
|
Property, plant and equipment, net
|
264
|
Intangible assets, net
|
|
Developed technology
|
12,649
|
Trade name
|
590
|
Goodwill
|
15,988
|
Current liabilities
|
(9,674)
|
Deferred taxes, net
|
(2,721)
|
Non-current liabilities
|
(22)
|
Total purchase price
|
$18,363
|
|
September 27, 2013
|
|||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Assets:
|
|
|
|
|
Investments held in supplemental retirement plan
(1)
|
$2,242
|
$—
|
$—
|
$2,242
|
Money market funds
(2)
|
16,193
|
—
|
—
|
16,193
|
U.S. agency securities
(2)
,
(3)
,
(4)
|
60,066
|
—
|
—
|
60,066
|
Commercial paper
(2)
,
(3)
|
—
|
10,991
|
—
|
10,991
|
Corporate bonds
(3)
,
(4)
|
—
|
134,238
|
—
|
134,238
|
Municipal debt securities
(3)
,
(4)
|
—
|
256,445
|
—
|
256,445
|
Total
|
$78,501
|
$401,674
|
$—
|
$480,175
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Investments held in supplemental retirement plan
(5)
|
$2,242
|
$—
|
$—
|
$2,242
|
Total
|
$2,242
|
$—
|
$—
|
$2,242
|
|
September 28, 2012
|
|||
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Assets:
|
|
|
|
|
Investments held in supplemental retirement plan
(1)
|
$2,140
|
$—
|
$—
|
$2,140
|
Money market funds
(2)
|
17,090
|
—
|
—
|
17,090
|
U.S. agency securities
(3)
,
(4)
|
25,012
|
—
|
—
|
25,012
|
Commercial paper
(2)
,
(3)
|
—
|
24,299
|
—
|
24,299
|
Corporate bonds
(3)
,
(4)
|
—
|
220,236
|
—
|
220,236
|
Municipal debt securities
(2)
,
(3)
,
(4)
|
—
|
401,648
|
—
|
401,648
|
Total
|
$44,242
|
$646,183
|
$—
|
$690,425
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
Investments held in supplemental retirement plan
(5)
|
$2,140
|
$—
|
$—
|
$2,140
|
Total
|
$2,140
|
$—
|
$—
|
$2,140
|
(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 long-term investments.
|
(5)
|
These liabilities are included within accrued liabilities and within other non-current liabilities.
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Expected life (in years)
|
4.37
|
4.53
|
4.40
|
Risk-free interest rate
|
0.5%
|
0.7%
|
1.5%
|
Expected stock price volatility
|
40.1%
|
43.8%
|
41.4%
|
Dividend yield
|
—
|
—
|
—
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Stock options granted - weighted-average grant date fair value
|
$10.23
|
$12.23
|
$22.31
|
Stock options exercised - intrinsic value
|
3,781
|
6,188
|
46,649
|
|
Shares
|
Weighted-Average
Exercise Price
|
Weighted-Average
Remaining
Contractual Life
|
Aggregate
Intrinsic
Value
(2)
|
|
(in thousands)
|
|
(in years)
|
(in thousands)
|
Options outstanding at September 28, 2012
|
4,622
|
$32.50
|
|
|
Grants
(1)
|
2,398
|
30.37
|
|
|
Exercises
|
(412)
|
22.69
|
|
|
Forfeitures and cancellations
|
(223)
|
39.56
|
|
|
Options outstanding at September 27, 2013
|
6,385
|
29.82
|
7.4
|
33,985
|
Options vested and expected to vest at September 27, 2013
|
6,136
|
29.79
|
7.4
|
32,882
|
Options exercisable at September 27, 2013
|
2,769
|
28.76
|
5.6
|
18,941
|
(1)
|
Includes the additional shares of our common stock issuable upon the exercise of those options subject to the equity award modification that occurred in the
first
quarter of fiscal
2013
in connection with the special cash dividend.
|
(2)
|
Aggregate intrinsic value is based on the closing price of our common stock on
September 27, 2013
of
$34.39
and excludes the impact of options that were not in-the-money.
|
|
Outstanding Options
|
|
Options Exercisable
|
|||
Range of Exercise Price
|
Shares
|
Weighted-Average
Remaining Contractual Life
|
Weighted-Average
Exercise Price
|
|
Shares
|
Weighted-Average
Exercise Price
|
|
(in thousands)
|
(in years)
|
|
|
(in thousands)
|
(in years)
|
$0.01 - $2.07
|
74
|
0.6
|
$1.87
|
|
74
|
$1.87
|
$2.08 - $6.28
|
40
|
1.1
|
5.65
|
|
40
|
5.65
|
$6.29 - $19.21
|
183
|
1.8
|
17.31
|
|
183
|
17.31
|
$19.22 - 28.12
|
464
|
4.6
|
25.21
|
|
396
|
25.12
|
$28.13 - $38.20
|
5,213
|
8.1
|
30.15
|
|
1,781
|
29.79
|
$38.21 - $48.14
|
354
|
6.7
|
42.09
|
|
249
|
42.64
|
$48.15 - $51.18
|
18
|
4.5
|
48.20
|
|
18
|
48.19
|
$51.19 and above
|
39
|
7.1
|
58.31
|
|
28
|
58.15
|
|
6,385
|
|
|
|
2,769
|
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Restricted stock units - vest date fair value
|
$27,013
|
$14,239
|
$15,453
|
|
Shares
|
Weighted-Average
Grant Date
Fair Value
|
|
(in thousands)
|
|
Non-vested at September 28, 2012
|
2,572
|
$37.98
|
Granted
|
1,270
|
31.12
|
Vested
|
(805)
|
39.17
|
Forfeitures
|
(184)
|
36.89
|
Non-vested at September 27, 2013
|
2,853
|
34.66
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Estimated forfeiture rate
|
6.13%
|
6.13%
|
6.10%
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 (2) |
September 28,
2012
(2)
|
September 30,
2011
(2)
|
Stock-based compensation:
|
|
||
Stock options
(1)
|
$21,334
|
$23,550
|
$24,788
|
Restricted stock units
|
39,644
|
22,952
|
18,339
|
Employee stock purchase plan
|
3,350
|
1,029
|
842
|
Stock appreciation rights
|
—
|
50
|
(304)
|
Total stock-based compensation
|
64,328
|
47,581
|
43,665
|
Benefit from income taxes
|
(19,316)
|
(14,930)
|
(14,744)
|
Total stock-based compensation, net of tax
|
$45,012
|
$32,651
|
$28,921
|
(1)
|
Expense excludes
$0.4 million
and
$0.6 million
in fiscal
2012
and
2011
related to stock-based compensation which was capitalized to property, plant and equipment. No compensation cost was capitalized to property, plant and equipment in fiscal
2013
.
|
(2)
|
We also recognize a tax benefit from certain exercises of incentive stock options and shares issued under our ESPP which are not included in the table above. This benefit was
$0.4 million
,
$0.2 million
and
$0.3 million
in fiscal
2013
,
2012
and
2011
, respectively.
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Stock-based compensation expense was classified as follows:
|
|
|
|
Cost of products
|
$765
|
$675
|
$642
|
Cost of services
|
387
|
239
|
182
|
Research and development
|
17,117
|
11,553
|
10,157
|
Sales and marketing
|
21,507
|
16,233
|
13,184
|
General and administrative
|
22,685
|
18,881
|
19,500
|
Restructuring
|
1,867
|
—
|
—
|
Total stock-based compensation expense
|
$64,328
|
$47,581
|
$43,665
|
Quarterly Repurchase Activity
|
Shares
Repurchased
|
Cost
(1)
|
Average Price Paid per Share
(2)
|
Q1 - Quarter ended December 28, 2012
|
1,674,648
|
$53,956
|
$32.20
|
Q2 - Quarter ended March 29, 2013
|
382,481
|
11,477
|
29.99
|
Q3 - Quarter ended June 28, 2013
|
250,000
|
8,709
|
34.82
|
Q4 - Quarter ended September 27, 2013
|
250,000
|
8,103
|
32.40
|
Total
|
2,557,129
|
$82,245
|
|
(1)
|
Cost of share repurchases includes the price paid per share and applicable commissions.
|
(2)
|
Average price paid per share excludes commission costs.
|
|
Severance and associated
costs |
Facilities and
contract
termination costs
|
Total
|
Restructuring charges
|
$4,723
|
$1,151
|
$5,874
|
Cash payments
|
(2,097)
|
(108)
|
(2,205)
|
Non-cash restructuring charges
|
(1,832)
|
—
|
(1,832)
|
Balance at September 27, 2013
|
$794
|
$1,043
|
$1,837
|
|
Severance
|
Facilities and
contract
termination costs
|
Fixed assets
write-off
|
Other associated
costs
|
Total
|
Balance at September 24, 2010
|
$2,804
|
$—
|
$—
|
$230
|
$3,034
|
Restructuring charges
|
3,185
|
—
|
199
|
22
|
3,406
|
Cash payments
|
(3,716)
|
—
|
—
|
(131)
|
(3,847)
|
Non-cash charges
|
(23)
|
—
|
(199)
|
(1)
|
(223)
|
Balance at September 30, 2011
|
$2,250
|
$—
|
$—
|
$120
|
$2,370
|
Restructuring charges
|
318
|
352
|
424
|
97
|
1,191
|
Cash payments
|
(2,572)
|
(185)
|
—
|
(201)
|
(2,958)
|
Non-cash charges/(credits)
|
4
|
164
|
(424)
|
(14)
|
(270)
|
Balance at September 28, 2012
|
$—
|
$331
|
$—
|
$2
|
$333
|
Restructuring charges
|
—
|
—
|
—
|
—
|
—
|
Cash payments
|
—
|
(322)
|
—
|
(2)
|
(324)
|
Non-cash charges
|
—
|
—
|
—
|
—
|
—
|
Balance at September 27, 2013
|
$—
|
$9
|
$—
|
$—
|
$9
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
United States
|
$155,777
|
$258,684
|
$350,189
|
Foreign
|
94,869
|
110,307
|
90,454
|
Total
|
$250,646
|
$368,991
|
$440,643
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Current:
|
|
|
|
Federal
|
$30,428
|
$56,105
|
$71,336
|
State
|
691
|
2,922
|
18,069
|
Foreign
|
49,003
|
43,659
|
33,567
|
Total current
|
80,122
|
102,686
|
122,972
|
Deferred:
|
|
|
|
Federal
|
(11,353)
|
904
|
3,638
|
State
|
(4,748)
|
521
|
9,756
|
Foreign
|
(3,677)
|
(254)
|
(6,305)
|
Total deferred
|
(19,778)
|
1,171
|
7,089
|
Provision for income taxes
|
$60,344
|
$103,857
|
$130,061
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Withholding Taxes
|
$42,567
|
$38,531
|
$32,200
|
|
Fiscal Year Ended
|
|
|
September 27,
2013 |
September 28,
2012 |
Deferred income tax assets:
|
|
|
Investments
|
$2,115
|
$2,096
|
Accounts receivable
|
128
|
182
|
Inventories
|
4,255
|
3,678
|
Net operating loss
|
3,297
|
2,863
|
U.S. state taxes
|
225
|
177
|
Accrued expenses
|
11,985
|
10,140
|
Stock-based compensation
|
29,428
|
25,720
|
Revenue recognition
|
59,505
|
63,843
|
Research and development credits
|
4,002
|
—
|
Foreign tax credits
|
3,512
|
3,410
|
Other
|
7,503
|
7,348
|
Total gross deferred income tax assets
|
125,955
|
119,447
|
Less: valuation allowance
|
—
|
—
|
Total deferred income tax assets
|
125,955
|
119,447
|
Deferred income tax liabilities:
|
|
|
Translation adjustment
|
(880)
|
(904)
|
Intangibles
|
(318)
|
(3,746)
|
International earnings
|
(1,782)
|
(6,373)
|
Depreciation and amortization
|
(1,028)
|
(6,761)
|
Unrealized gain on investments
|
(275)
|
(768)
|
Deferred income tax assets, net
|
$121,672
|
$100,895
|
The above deferred income tax assets, net have been classified in the accompanying consolidated balance sheets as follows:
|
|
|
Current deferred income tax assets
|
$78,381
|
$80,966
|
Long-term deferred income tax assets, net
|
43,291
|
19,939
|
Deferred income tax assets, net
|
$121,672
|
$100,895
|
|
Fiscal Year Ended
|
||
|
September 27, 2013
|
September 28, 2012
|
September 30, 2011
|
Federal statutory rate
|
35.0%
|
35.0%
|
35.0%
|
State income taxes, net of federal effect
|
0.6
|
1.1
|
4.7
|
Stock-based compensation expense rate
|
1.3
|
0.5
|
0.3
|
Research and development tax credits
|
(3.1)
|
(1.1)
|
(1.6)
|
Tax exempt interest
|
(0.2)
|
(0.3)
|
(0.3)
|
U.S. manufacturing tax incentives
|
(2.3)
|
(2.1)
|
(1.9)
|
Foreign rate differential
|
(4.5)
|
(5.3)
|
(4.6)
|
Foreign reversal of deferred tax liabilities
|
(3.0)
|
—
|
(2.5)
|
Other
|
0.3
|
0.3
|
0.4
|
Effective tax rate
|
24.1%
|
28.1%
|
29.5%
|
|
Fiscal Year Ended
|
||
|
September 27, 2013
|
September 28, 2012
|
September 30, 2011
|
Balance at beginning of year
|
$16,880
|
$8,683
|
$16,558
|
Gross increases - tax positions taken during prior years
|
16,865
|
3,156
|
1,006
|
Gross decreases - tax positions taken during prior years
|
—
|
(493)
|
(8,083)
|
Increases in balances related to tax positions taken during current year
|
2,639
|
6,770
|
299
|
Lapse of statute of limitations
|
(3,064)
|
(1,236)
|
(1,097)
|
Settlements
|
(852)
|
—
|
—
|
Balance at end of year
|
$32,468
|
$16,880
|
$8,683
|
|
September 27,
2013 |
September 28,
2012 |
Accrued interest
|
$1,680
|
$2,046
|
Accrued penalties
|
1,536
|
1,937
|
Total
|
$3,216
|
$3,983
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Retirement plan expenses
|
$15,810
|
$12,909
|
$11,300
|
|
Payments Due By Fiscal Period
|
||||||
|
Fiscal
2014 |
Fiscal
2015 |
Fiscal
2016 |
Fiscal
2017 |
Fiscal
2018 |
Thereafter
|
Total
|
Naming rights
|
$7,341
|
$7,432
|
$7,525
|
$7,619
|
$7,715
|
$118,699
|
$156,331
|
Operating leases
|
17,094
|
9,443
|
6,087
|
4,399
|
2,877
|
3,028
|
42,928
|
Purchase obligations
|
4,261
|
1,387
|
155
|
39
|
—
|
—
|
5,842
|
Total
|
$28,696
|
$18,262
|
$13,767
|
$12,057
|
$10,592
|
$121,727
|
$205,101
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Rent expense
|
$13,092
|
$13,463
|
$12,600
|
Rent payable to principal stockholder
|
1,375
|
1,372
|
1,400
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
United States
|
$255,956
|
$299,992
|
$302,218
|
International
|
653,718
|
633,022
|
658,847
|
Total revenue
|
$909,674
|
$933,014
|
$961,065
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
United States
|
28%
|
32%
|
32%
|
Japan
|
18%
|
18%
|
20%
|
Europe
|
13%
|
15%
|
15%
|
Taiwan
|
5%
|
7%
|
8%
|
South Korea
|
20%
|
17%
|
13%
|
China
|
9%
|
6%
|
6%
|
Other
|
7%
|
5%
|
6%
|
Total
|
100%
|
100%
|
100%
|
|
September 27,
2013 |
September 28,
2012 |
United States
|
$188,580
|
$211,647
|
International
|
54,337
|
43,029
|
Total long-lived tangible assets, net of accumulated depreciation
|
$242,917
|
$254,676
|
|
Fiscal Year Ended
|
||
|
September 27, 2013
|
September 28, 2012
|
September 30, 2011
|
|
(in thousands, except per share amounts)
|
||
Numerator:
|
|
|
|
Net income attributable to Dolby Laboratories, Inc.
|
$189,271
|
$264,302
|
$309,267
|
Denominator:
|
|
|
|
Weighted-average shares outstanding—basic
|
101,879
|
106,926
|
111,444
|
Potential common shares from options to purchase Class A and Class B common stock
|
287
|
493
|
941
|
Potential common shares from restricted stock units
|
622
|
122
|
169
|
Weighted-average shares outstanding—diluted
|
102,788
|
107,541
|
112,554
|
Net income per share attributable to Dolby Laboratories, Inc.—basic
|
$1.86
|
$2.47
|
$2.78
|
Net income per share attributable to Dolby Laboratories, Inc.—diluted
|
$1.84
|
$2.46
|
$2.75
|
Antidilutive options excluded from calculation
|
5,348
|
6,496
|
3,289
|
Antidilutive restricted stock units excluded from calculation
|
1,817
|
2,550
|
535
|
|
Fiscal Year 2013
|
|
Fiscal Year 2012
|
||||||
|
Q4
|
Q3
|
Q2
|
Q1
|
|
Q4
|
Q3
|
Q2
|
Q1
|
|
(in thousands, except per share amounts)
|
||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
Licensing
|
$191,043
|
$184,707
|
$226,455
|
$204,876
|
|
$192,154
|
$180,886
|
$227,849
|
$200,424
|
Products
|
19,998
|
17,381
|
17,726
|
25,498
|
|
27,628
|
22,132
|
27,228
|
26,400
|
Services
|
5,611
|
4,986
|
5,165
|
6,228
|
|
5,973
|
7,304
|
7,682
|
7,354
|
Total revenue
|
216,652
|
207,074
|
249,346
|
236,602
|
|
225,755
|
210,322
|
262,759
|
234,178
|
Cost of revenue
|
23,491
|
24,340
|
23,283
|
25,605
|
|
26,994
|
21,031
|
23,592
|
20,410
|
Gross margin
|
193,161
|
182,734
|
226,063
|
210,997
|
|
198,761
|
189,291
|
239,167
|
213,768
|
Income before taxes and controlling interest
|
58,868
|
37,847
|
84,872
|
69,059
|
|
72,951
|
70,321
|
122,515
|
103,204
|
Net income attributable to Dolby Laboratories
|
$45,795
|
$30,216
|
$61,911
|
$51,349
|
|
$51,494
|
$51,529
|
$88,120
|
$73,159
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$0.45
|
$0.30
|
$0.61
|
$0.50
|
|
$0.49
|
$0.48
|
$0.81
|
$0.67
|
Diluted
|
$0.44
|
$0.29
|
$0.60
|
$0.50
|
|
$0.49
|
$0.48
|
$0.81
|
$0.67
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
101,768
|
101,751
|
101,638
|
102,361
|
|
104,079
|
106,328
|
108,415
|
108,884
|
Diluted
|
102,976
|
103,031
|
102,680
|
103,523
|
|
104,915
|
107,202
|
109,170
|
109,443
|
Company Name
|
Ownership interest
|
Dolby Properties, LLC
|
37.5%
|
Dolby Properties Brisbane, LLC
|
49.0%
|
Dolby Properties Burbank, LLC
|
49.0%
|
Dolby Properties United Kingdom, LLC
|
49.0%
|
Dolby Properties, LP
|
10.0%
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Related party rent expense included in operating expenses
|
$2,526
|
$1,372
|
$1,372
|
|
Fiscal Year Ended
|
||
|
September 27,
2013 |
September 28,
2012 |
September 30,
2011 |
Distributions to principal stockholder
|
$5.0
|
$0.1
|
$0.3
|
Executive Officers
|
Age
|
Position(s)
|
Kevin Yeaman
|
47
|
President and Chief Executive Officer
|
Lewis Chew
|
50
|
Executive Vice President and Chief Financial Officer
|
Michael Rockwell
|
46
|
Executive Vice President, Advanced Technology Group
|
Andy Sherman
|
46
|
Executive Vice President, General Counsel and Corporate Secretary
|
Michael Bergeron
|
56
|
Senior Vice President, Worldwide Sales and Field Operations
|
1.
|
Financial Statements: See “Index to Consolidated Financial Statements” in Part II, Item 8 of this Annual Report on Form 10-K.
|
2.
|
Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K.
|
DOLBY LABORATORIES, INC.
|
|
By:
|
/
S
/ LEWIS CHEW
|
|
Lewis Chew
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
SIGNATURE
|
|
TITLE
|
DATE
|
/S/ PETER GOTCHER
|
|
Chairman of the Board of Directors
|
November 14, 2013
|
Peter Gotcher
|
|
|
|
|
|
|
|
/S/ KEVIN J. YEAMAN
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
November 14, 2013
|
Kevin J. Yeaman
|
|
|
|
|
|
|
|
/S/ LEWIS CHEW
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
November 14, 2013
|
Lewis Chew
|
|
|
|
|
|
|
|
/S/ MICHELINE CHAU
|
|
Director
|
November 14, 2013
|
Micheline Chau
|
|
|
|
|
|
|
|
/S/ DAVID DOLBY
|
|
Director
|
November 14, 2013
|
David Dolby
|
|
|
|
|
|
|
|
/S/ NICHOLAS DONATIELLO, JR.
|
|
Director
|
November 14, 2013
|
Nicholas Donatiello, Jr.
|
|
|
|
|
|
|
|
/S/ N.W. JASPER, JR.
|
|
Director
|
November 14, 2013
|
N. W. Jasper, Jr.
|
|
|
|
|
|
|
|
/S/ SANFORD ROBERTSON
|
|
Director
|
November 14, 2013
|
Sanford Robertson
|
|
|
|
|
|
|
|
/S/ ROGER SIBONI
|
|
Director
|
November 14, 2013
|
Roger Siboni
|
|
|
|
|
|
|
|
/S/ AVADIS TEVANIAN, JR.
|
|
Director
|
November 14, 2013
|
Avadis Tevanian, Jr.
|
|
|
|
*
|
Denotes a management contract or compensatory plan or arrangement.
|
‡
|
Furnished herewith
|
RAY DOLBY TRUST UNDER THE DOLBY FAMILY TRUST INSTRUMENT DATED MAY 7, 1999
By:
/s/ Dagmar Dolby
Name: Dagmar Dolby
Title: Trustee
|
DOLBY FAMILY TRUST INSTRUMENT DATED MAY 7, 1999
By:
/s/ Dagmar Dolby
Name: Dagmar Dolby
Title: Trustee
|
RAY DOLBY 2002 TRUST A DATED APRIL 19, 2002
By:
/s/ Dagmar Dolby
Name: Dagmar Dolby
Title: Trustee
|
RAY DOLBY 2002 TRUST B DATED APRIL 19, 2002
By:
/s/ Dagmar Dolby
Name: Dagmar Dolby
Title: Trustee
|
DOLBY LABORATORIES, INC.
a California corporation
By:
/s/ Andy Sherman
Name:
Andy Sherman
Title:
Executive Vice President and General Counsel
|
|
Name
|
Jurisdiction of Incorporation/Organization
|
Dolby Laboratories, Inc.
|
California
|
Dolby Laboratories Licensing Corporation
|
New York
|
Dolby International AB
|
Sweden
|
•
|
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/ K
EVIN
J. Y
EAMAN
|
Kevin J. Yeaman
President and Chief Executive Officer
(Principal Executive Officer)
|
|
/s/ L
EWIS
C
HEW
|
Lewis Chew
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K 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 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 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/ K
EVIN
J. Y
EAMAN
|
Kevin J. Yeaman
|
President and Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K 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 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 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/ L
EWIS
C
HEW
|
Lewis Chew
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|