ý
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
90-0199783
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
1275 Market Street
San Francisco, CA
|
94103-1410
|
(415) 558-0200
|
(Address of principal executive offices)
|
(Zip Code)
|
(Registrant’s telephone number, including area code)
|
Securities registered pursuant to Section 12(b) of the Act:
|
|
Class A common stock, $0.001 par value
|
The New York Stock Exchange
|
(Title of class)
|
(Name of each exchange on which registered)
|
Securities registered pursuant to Section 12(g) of the Act:
|
|
Class B common stock, $0.001 par value
|
|
(Title of class)
|
|
PART I
|
|||
Item 1
|
—
|
||
Item 1A
|
—
|
||
Item 1B
|
—
|
||
Item 2
|
—
|
||
Item 3
|
—
|
||
Item 4
|
—
|
||
|
|
|
|
PART II
|
|||
Item 5
|
—
|
||
Item 6
|
—
|
||
Item 7
|
—
|
||
Item 7A
|
—
|
||
Item 8
|
—
|
Consolidated
Financial Statements
|
|
Item 9
|
—
|
||
Item 9A
|
—
|
||
Item 9B
|
—
|
||
|
|
|
|
PART III
|
|||
Item 10
|
—
|
||
Item 11
|
—
|
||
Item 12
|
—
|
||
Item 13
|
—
|
||
Item 14
|
—
|
||
|
|
|
|
PART IV
|
|||
Item 15
|
—
|
||
Abbreviation
|
|
Term
|
AAC
|
|
Advanced Audio Coding
|
AFS
|
|
Available-For-Sale (Securities)
|
AOCI
|
|
Accumulated Other Comprehensive Income
|
APIC
|
|
Additional-Paid In-Capital
|
ASC
|
|
Accounting Standards Codification
|
ASP
|
|
Average Selling Price
|
ASU
|
|
Accounting Standards Update
|
ATSC
|
|
Advanced Television Systems Committee
|
AVR
|
|
Audio/Video Receiver
|
CE
|
|
Consumer Electronics
|
CODM
|
|
Chief Operating Decision Maker
|
COGS
|
|
Cost Of Goods Sold
|
COSO
|
|
Committee Of Sponsoring Organizations (Of The Treadway Commission)
|
DD
|
|
Dolby Digital®
|
DD+
|
|
Dolby Digital Plus™
|
DMA
|
|
Digital Media Adapter
|
DTV
|
|
Digital Television
|
DVB
|
|
Digital Video Broadcasting
|
DVD
|
|
Digital Versatile Disc
|
EPS
|
|
Earnings Per Share
|
ESP
|
|
Estimated Selling Price
|
ESPP
|
|
Employee Stock Purchase Plan
|
FASB
|
|
Financial Accounting Standards Board
|
FCPA
|
|
Foreign Corrupt Practices Act
|
FIFO
|
|
First-in, First-out
|
G&A
|
|
General & Administrative
|
HD
|
|
High Definition
|
HDR
|
|
High-Dynamic Range
|
HDTV
|
|
High Definition Television
|
HE AAC
|
|
High Efficiency Advanced Audio Coding
|
HEVC
|
|
High Efficiency Video Coding
|
HFR
|
|
High Frame Rate
|
HTIB
|
|
Home Theater In-A-Box
|
IC
|
|
Integrated Circuit
|
IMB
|
|
Integrated Media Block
|
IP
|
|
Intellectual Property
|
IPO
|
|
Initial Public Offering
|
IPTV
|
|
Internet Protocol Television
|
IT
|
|
Information Technology
|
LCD
|
|
Liquid Crystal Display
|
LIFO
|
|
Last-in, First-out
|
LP
|
|
Limited Partner/Partnership
|
ME
|
|
Multiple Element
|
NOL
|
|
Net Operating Loss
|
OCI
|
|
Other Comprehensive Income
|
ODD
|
|
Optical Disc Drive
|
OECD
|
|
Organization For Economic Co-Operation & Development
|
OEM
|
|
Original Equipment Manufacturer
|
OLED
|
|
Organic Light-Emitting Diode
|
OTT
|
|
Over-The-Top
|
PC
|
|
Personal Computer
|
PCS
|
|
Post-Contract Support
|
PP&E
|
|
Property, Plant, & Equipment
|
PSO
|
|
Performance-Based Stock Option
|
R&D
|
|
Research & Development
|
RSU
|
|
Restricted Stock Unit
|
S&M
|
|
Sales & Marketing
|
SERP
|
|
Supplemental Executive Retirement Plan
|
SoC
|
|
System(s)-On-A-Chip
|
STB
|
|
Set-Top Box
|
TAM
|
|
Total Available Market
|
TPE
|
|
Third Party Evidence
|
TSR
|
|
Total Stockholder Return
|
UHD
|
|
Ultra High Definition
|
U.S. GAAP
|
|
Generally Accepted Accounting Principles In The United States
|
VSOE
|
|
Vendor Specific Objective Evidence
|
|
Fiscal Year Ended
|
||
Revenue
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
Licensing
|
89%
|
89%
|
89%
|
Products
|
9%
|
9%
|
9%
|
Services
|
2%
|
2%
|
2%
|
Total
|
100%
|
100%
|
100%
|
|
Fiscal Year Ended
|
||
Revenue By Geographic Location
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
United States
|
35%
|
31%
|
29%
|
International
|
65%
|
69%
|
71%
|
|
Fiscal Year Ended
|
|
||
Market
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
Main Offerings Incorporating Our Technologies
|
Broadcast
|
43%
|
46%
|
44%
|
STBs & Televisions
|
PC
|
15%
|
16%
|
17%
|
Windows and macOS operating systems
|
Mobile
|
13%
|
12%
|
13%
|
Smartphones & tablets
|
CE
|
13%
|
13%
|
14%
|
DMAs, Blu-ray Disc devices, AVRs, soundbars, DVDs, & HTIBs
|
Other
|
16%
|
13%
|
12%
|
Gaming consoles, Auto DVD, Dolby Cinema, Dolby Voice
|
Total
|
100%
|
100%
|
100%
|
|
Product
|
Description
|
|
Cinema
|
Cinema Imaging Products
|
Digital Cinema Servers used to load, store, decrypt, decode, watermark, and playback digital film files for presentation on digital cinema projectors and software used to encrypt, encode, and package digital media files for distribution.
|
Cinema Audio Products
|
Cinema Processors, amplifiers, and loudspeakers used to decode, render, and optimally playback digital cinema soundtracks including those using Dolby Atmos.
|
|
Other
|
Dolby Conference Phone
|
An integral hardware component of the Dolby Voice conferencing solution that enhances productivity through superior sound, full-room voice capture, spatial voice separation, and touch-screen interface.
|
Other Products
|
3-D glasses and kits, broadcast hardware and software used to encode, transmit, and decode multiple channels of high quality audio for DTV and HDTV distribution, monitors, and accessibility solutions for hearing and visually impaired consumers.
|
•
|
DD+ and HE-AAC are mandated for use in terrestrial broadcast across many countries including France, Italy, the United Kingdom, Sweden, Germany, Poland, Turkey, and Russia. In addition, DD+ and HE-AAC are included in the digital terrestrial television specifications of emerging digital TV markets in Africa, South-East Asia, and India while operators in China have selected DD and DD+ as optional technologies for transmissions using the country’s digital terrestrial television specification. In mobile devices, HE-AAC is a de facto audio standard.
|
•
|
DD+ is the de facto technology used by a wide range of pay-TV operators and streaming services worldwide and is included in popular operating systems such as iOS and Windows.
|
•
|
DD is mandated for HD broadcast in multiple regions including North America and South Korea, and for DVD players on a global basis.
|
•
|
AC-4 is Dolby’s next generation of audio technology that has been adopted for implementation in certain regions by worldwide standards organizations including the DVB and ATSC. AC-4 has also been adopted or proposed in forthcoming regional and country standards. AC-4 is already being supported in certain TVs that are available worldwide from major manufacturers.
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Research & Development
|
$
|
233,312
|
|
$
|
219,607
|
|
$
|
201,324
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Sales & Marketing
|
$
|
296,661
|
|
$
|
295,267
|
|
$
|
279,174
|
|
Licensing
|
|
Products
|
|
Services
|
Fraunhofer Institut Integrierte Schaltungen
|
|
Barco NV
|
|
Deluxe Entertainment Services Group Inc.
|
IMAX Corporation
|
|
Christie Digital Systems USA, Inc.
|
|
Sony Corporation
|
Koninklijke Philips Electronics NV
|
|
Cisco Systems
|
|
Technicolor
|
Qualcomm, Inc.
|
|
GDC Technology Limited
|
|
Xperi Corporation (acquired DTS, Inc. in December 2016)
|
Samsung
|
|
IMAX Corporation
|
|
|
Sony Corporation
|
|
MasterImage 3D, Inc.
|
|
|
Technicolor
|
|
Polycom Inc
|
|
|
Xperi Corporation (acquired DTS, Inc. in December 2016)
|
|
QSC Audio Products, LLC
|
|
|
|
|
Qube Cinema, Inc.
|
|
|
|
|
RealD, Inc.
|
|
|
|
|
Samsung (acquired Harman Group in March 2017)
|
|
|
|
|
Sony Corporation
|
|
|
|
|
Technicolor
|
|
|
|
|
Ultra Stereo Labs, Inc. (USL)
|
|
|
|
|
XpanD, Inc.
|
|
|
|
|
Xperi Corporation (acquired DTS, Inc. in December 2016)
|
|
|
•
|
Degree of access and inclusion in industry standards;
|
•
|
Technological performance, flexibility, and range of application;
|
•
|
Brand recognition and reputation;
|
•
|
Timeliness and relevance of new product introductions;
|
•
|
Quality and reliability of products and services;
|
•
|
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;
|
•
|
Availability of compatible high quality audio content; and
|
•
|
Price.
|
•
|
Purchasing trends away from traditional PCs and toward computing devices without optical disc drives, such as mobile devices, which trends we expect to continue;
|
•
|
Because PC OEMs are required to pay us a higher per-unit royalty for Windows PCs that include optical disc playback functionality than Windows PCs that do not include such functionality, the continued decreasing inclusion of optical disc drives in Windows PCs will result in lower per-unit royalties;
|
•
|
PC software that includes our technologies on an unauthorized and infringing basis, for which we receive no royalty payments; and
|
•
|
Continued decreasing inclusion of independent software vendor media applications by PC OEMs.
|
•
|
Timing of royalty reports from our licensees and meeting revenue recognition criteria;
|
•
|
Royalty reports including positive or negative corrective adjustments;
|
•
|
Retroactive royalties that cover extended periods of time; and
|
•
|
Timing of revenue recognition under licensing agreements and other contractual arrangements, including recognition of unusually large amounts of revenue in any given quarter because not all of our revenue recognition criteria were met in prior periods.
|
•
|
Rapid technological change;
|
•
|
New and improved technology and frequent product introductions;
|
•
|
Changing consumer and licensee demands;
|
•
|
Evolving industry standards; and
|
•
|
Technology and product obsolescence.
|
•
|
Possibility that innovations may not be protectable;
|
•
|
Failure to protect innovations that later turn out to be important;
|
•
|
Insufficient patent protection to prevent third parties from designing around our patent claims;
|
•
|
Our pending patent applications may not be approved; and
|
•
|
Possibility that an issued patent may later be found to be invalid or unenforceable.
|
•
|
Our ability to enforce our contractual and IP rights, especially in countries that do not recognize and enforce IP 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;
|
•
|
Limited or no patent protection for our DD 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
|
•
|
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 IP and contractual rights without relying solely on the legal systems in the countries in which we operate.
|
•
|
Content creators, such as film directors, studios, mobile and online content producers, and music producers;
|
•
|
Content distributors, such as studios, film exhibitors, broadcasters, operators, and OTT video service providers and video game publishers; and
|
•
|
Device manufacturers.
|
•
|
Diversion of management time and focus from operating our business to acquisition integration challenges;
|
•
|
Cultural and logistical challenges associated with integrating employees from acquired businesses into our organization;
|
•
|
Retaining employees, suppliers and customers from businesses we acquire;
|
•
|
The need to implement or improve internal controls, procedures, and policies appropriate for a public company at businesses that prior to the acquisition may have lacked effective controls, procedures, and policies;
|
•
|
Possible write-offs or impairment charges resulting from acquisitions;
|
•
|
Unanticipated or unknown liabilities relating to acquired businesses; and
|
•
|
The need to integrate acquired businesses’ accounting, management information, manufacturing, human resources, and other administrative systems to permit effective management.
|
•
|
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.;
|
•
|
Compliance with applicable international laws and regulations, including antitrust laws, that may change unexpectedly, differ, or conflict with laws in other countries where we conduct business, or are otherwise not harmonized with one another;
|
•
|
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.;
|
•
|
Potential adverse changes in the political and/or economic stability of foreign countries or in their diplomatic relations with the U.S.;
|
•
|
Changes in diplomatic and trade relationships, including new tariffs, trade protection measures, import or export licensing requirements, trade embargoes and other trade barriers;
|
•
|
Difficulty in establishing, staffing, and managing foreign operations, including but not limited to restrictions on the ability to obtain or retain licenses required for operation, relationships with local labor unions and works councils, investment restrictions and/or requirements, and restrictions on foreign ownership of subsidiaries;
|
•
|
Adverse fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities we undertake;
|
•
|
Poor recognition of IP rights;
|
•
|
Difficulties in enforcing contractual rights;
|
•
|
Multi-jurisdictional data protection and privacy laws, including restrictions on transferring personally identifiable information outside of a jurisdiction;
|
•
|
Political or social instability in the U.K. and Europe (including but not limited to uncertainty resulting from the Brexit referendum in the U.K.) and in Russia, the Middle East, North Africa, Latin America and other emerging markets;
|
•
|
Uncertainties related to any geopolitical, economic and regulatory effects or changes due to the current political climate in the U.S.;
|
•
|
Natural disasters, war or events of terrorism; and
|
•
|
The strength of international economies.
|
•
|
Earnings being lower than anticipated in countries that have lower tax rates and higher than anticipated in
|
•
|
Changes in the valuation of our deferred tax assets and liabilities;
|
•
|
Transfer pricing adjustments;
|
•
|
Tax effects of nondeductible compensation;
|
•
|
Tax costs related to intercompany realignments;
|
•
|
Any obligations or decisions to repatriate earnings from abroad earlier than anticipated;
|
•
|
Changes in accounting principles; or
|
•
|
Changes in tax laws and regulations in the countries in which we operate, including U.S. corporate taxation proposals being considered by the United States Congress.
|
Entity Name
|
Minority Ownership Interest
|
Location Of Properties
|
Approximate Square Footage
|
Dolby Properties Brisbane, LLC
|
49.0%
|
Brisbane, California
|
43,500
|
Dolby Properties Burbank, LLC
|
49.0%
|
Burbank, California
|
22,000
|
Dolby Properties UK, LLC
|
49.0%
|
Wootton Bassett, England
|
33,000
|
Dolby Properties, LP
|
10.0%
|
|
Fiscal Year 2017
|
|
Fiscal Year 2016
|
||||||||||
|
High
|
Low
|
|
High
|
Low
|
||||||||
First Quarter (Q1)
|
$
|
54.96
|
|
$
|
45.19
|
|
|
$
|
35.86
|
|
$
|
31.52
|
|
Second Quarter (Q2)
|
52.41
|
|
46.06
|
|
|
43.52
|
|
30.50
|
|
||||
Third Quarter (Q3)
|
53.09
|
|
48.96
|
|
|
49.01
|
|
42.15
|
|
||||
Fourth Quarter (Q4)
|
59.07
|
|
48.25
|
|
|
54.54
|
|
47.03
|
|
Authorization Period
|
Authorization Amount
|
||
Fiscal 2010: November 2009
|
$
|
250,000
|
|
Fiscal 2010: July 2010
|
300,000
|
|
|
Fiscal 2011: July 2011
|
250,000
|
|
|
Fiscal 2012: February 2012
|
100,000
|
|
|
Fiscal 2015: October 2014
|
200,000
|
|
|
Fiscal 2017: January 2017
|
200,000
|
|
|
Total
|
$
|
1,300,000
|
|
Repurchase Activity
|
Total Shares Purchased
|
Average Price
Paid Per Share (1) |
Total Shares Purchased As Part Of Publicly Announced Programs
|
Remaining Authorized Repurchases
(2)
|
||||
July 1, 2017 - July 28, 2017
|
—
|
|
$
|
—
|
|
—
|
|
$177.0 million
|
July 29, 2017 - August 25, 2017
|
488,909
|
|
51.13
|
|
488,909
|
|
$152.0 million
|
|
August 26, 2017 - September 29, 2017
|
—
|
|
—
|
|
—
|
|
$152.0 million
|
|
Total
|
488,909
|
|
|
488,909
|
|
|
(1)
|
Average price paid per share excludes commission costs.
|
(2)
|
Amounts represent the approximate dollar value of the maximum remaining number of shares that may yet be purchased under the stock repurchase program, and excludes commission costs.
|
|
Fiscal Year Ended
|
||||||||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
September 26,
2014 |
September 27,
2013 |
||||||||||
Operations:
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
1,081,454
|
|
$
|
1,025,738
|
|
$
|
970,638
|
|
$
|
960,176
|
|
$
|
909,674
|
|
Gross margin
|
963,147
|
|
916,756
|
|
875,822
|
|
890,000
|
|
812,955
|
|
|||||
Operating expenses
|
714,515
|
|
684,961
|
|
662,594
|
|
616,282
|
|
567,693
|
|
|||||
Income before provision for income taxes
|
256,644
|
|
235,904
|
|
245,782
|
|
276,099
|
|
250,646
|
|
|||||
Net income attributable to Dolby Laboratories, Inc.
|
201,802
|
|
185,860
|
|
181,390
|
|
206,103
|
|
189,271
|
|
|||||
|
|
|
|
|
|
||||||||||
Net Income Per Share:
|
|
|
|
|
|
||||||||||
Basic
|
$
|
1.98
|
|
$
|
1.85
|
|
$
|
1.77
|
|
$
|
2.02
|
|
$
|
1.86
|
|
Diluted
|
$
|
1.95
|
|
$
|
1.81
|
|
$
|
1.75
|
|
$
|
1.99
|
|
$
|
1.84
|
|
Weighted-Average Shares Outstanding:
|
|
|
|
|
|
||||||||||
Basic
|
101,784
|
|
100,717
|
|
102,354
|
|
102,151
|
|
101,879
|
|
|||||
Diluted
|
103,286
|
|
102,424
|
|
103,862
|
|
103,632
|
|
102,788
|
|
|||||
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
$
|
0.58
|
|
$
|
0.50
|
|
$
|
0.42
|
|
$
|
—
|
|
$
|
4.00
|
|
Cash dividend paid per common share
|
$
|
0.56
|
|
$
|
0.48
|
|
$
|
0.40
|
|
$
|
—
|
|
$
|
4.00
|
|
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
September 26,
2014 |
September 27,
2013 |
||||||||||
Cash and cash equivalents
|
$
|
627,017
|
|
$
|
516,112
|
|
$
|
531,926
|
|
$
|
568,472
|
|
$
|
454,397
|
|
Working capital
(1)
|
765,661
|
|
546,647
|
|
611,548
|
|
730,036
|
|
561,526
|
|
|||||
Short-term and long-term investments
|
562,121
|
|
515,533
|
|
459,916
|
|
527,543
|
|
446,605
|
|
|||||
Total assets
|
2,533,554
|
|
2,310,106
|
|
2,133,293
|
|
1,984,012
|
|
1,737,945
|
|
|||||
Long-term debt
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||
Total stockholders’ equity—Dolby Laboratories, Inc.
|
2,136,742
|
|
1,970,256
|
|
1,807,068
|
|
1,731,648
|
|
1,481,110
|
|
(1)
|
Working capital as of September 26, 2014 and September 27, 2013 has been adjusted by $86.4 million and $84.2 million, respectively, to reflect the reclassification of deferred tax assets from current assets to non-current assets following our adoption of ASU 2015-17 during the first quarter of fiscal 2016. The changes to working capital as of September 25, 2015 as a result of this reclassification had previously been disclosed within our quarterly filings beginning with our Form 10-Q filed for the fiscal quarter ended January 1, 2016. For additional information, refer to Note 2 "
Summary Of Significant Accounting Policies
" to our consolidated financial statements.
|
•
|
Identifying the significant deliverables within the arrangements and determining whether the significant deliverables constitute separate units of accounting. 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;
|
•
|
Assessing inputs used to determine selling price (whether VSOE, TPE, or ESP) for the significant deliverables. 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 strategies, customer demands, and industry technology lifecycles. Management applies judgment to establish margin objectives, pricing strategies, and technology lifecycles;
|
•
|
Estimating, as necessary, the period of time over which customers receive certain elements of the arrangement following initial delivery so as to assess the period over which revenue should be recognized.
|
|
Fiscal Year Ended
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||
Licensing
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|
$
|
%
|
|
$
|
%
|
Revenue
|
$965,792
|
$917,032
|
$868,111
|
|
$48,760
|
5%
|
|
$48,921
|
6%
|
Percentage of total revenue
|
89%
|
89%
|
89%
|
|
|
|
|
|
|
Cost of licensing
|
39,216
|
28,333
|
10,879
|
|
10,883
|
38%
|
|
17,454
|
160%
|
Gross margin
|
926,576
|
888,699
|
857,232
|
|
37,877
|
4%
|
|
31,467
|
4%
|
Gross margin percentage
|
96%
|
97%
|
99%
|
|
|
|
|
|
|
Factor
|
Revenue
|
Gross Margin
|
||
Broadcast
|
á
|
Higher revenues from recoveries and patent licensing, and higher volume of TVs, partially offset by lower volume of STBs
|
â
|
Increase in cost of licensing primarily due to amortization on acquired assets
|
Other
|
á
|
Higher revenues from Dolby Cinema and administrative fees from Via Licensing patent pools
|
||
CE
|
á
|
Higher volume of DMAs and revenues from patent licensing, partially offset by lower volumes of DVDs, HTIBs, and Blu-ray and to a lesser extent, lower recoveries
|
||
Mobile
|
â
|
Decrease due to timing of revenue under contractual arrangements, partially offset by higher penetration into mobile platforms
|
||
PC
|
ßà
|
Increase due to timing of revenue under contractual arrangements, offset by lower volume and lower recoveries
|
|
Fiscal Year Ended
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||
Products
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|
$
|
%
|
|
$
|
%
|
Revenue
|
$95,290
|
$90,543
|
$83,904
|
|
$4,747
|
5%
|
|
$6,639
|
8%
|
Percentage of total revenue
|
9%
|
9%
|
9%
|
|
|
|
|
|
|
Cost of products
|
61,256
|
64,853
|
70,490
|
|
(3,597)
|
(6)%
|
|
(5,637)
|
(8)%
|
Gross margin
|
34,034
|
25,690
|
13,414
|
|
8,344
|
32%
|
|
12,276
|
92%
|
Gross margin percentage
|
36%
|
28%
|
16%
|
|
|
|
|
|
|
Factor
|
Revenue
|
Gross Margin
|
||
Cinema
|
á
|
Higher units of digital server and audio products, partially offset by lower volume of 3D glasses
|
á
|
Higher utilization of manufacturing capacity and improved mix of products, partially offset by higher excess & obsolete charges
|
Factor
|
Revenue
|
Gross Margin
|
||
Cinema
|
á
|
Higher sales from extended warranty programs, and higher units of audio products and 3D glasses, partially offset by lower units of digital servers
|
á
|
Lower excess & obsolete charges
|
|
Fiscal Year Ended
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||
Services
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|
$
|
%
|
|
$
|
%
|
Revenue
|
$20,372
|
$18,163
|
$18,623
|
|
$2,209
|
12%
|
|
$(460)
|
(2)%
|
Percentage of total revenue
|
2%
|
2%
|
2%
|
|
|
|
|
|
|
Cost of services
|
17,835
|
15,796
|
13,447
|
|
2,039
|
13%
|
|
2,349
|
17%
|
Gross margin
|
2,537
|
2,367
|
5,176
|
|
170
|
7%
|
|
(2,809)
|
(54)%
|
Gross margin percentage
|
12%
|
13%
|
28%
|
|
|
|
|
|
|
Factor
|
Revenue
|
Gross Margin
|
||
Configuration & Post-Production
|
á
|
Higher mastering services
|
No significant fluctuations
|
|
Support & Other
|
â
|
Decreased support and maintenance services
|
Factor
|
Revenue
|
Gross Margin
|
||
Configuration & Post-Production
|
â
|
Lower mastering services
|
â
|
Lower utilization of available services capacity
|
Support & Other
|
á
|
Increased support and maintenance services
|
No significant fluctuations
|
|
Fiscal Year Ended
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|
$
|
%
|
|
$
|
%
|
Research and development
|
$233,312
|
$219,607
|
$201,324
|
|
$13,705
|
6%
|
|
$18,283
|
9%
|
Percentage of total revenue
|
22%
|
21%
|
21%
|
|
|
|
|
|
|
Category
|
Key Drivers
|
|
Compensation & Benefits
|
á
|
Higher headcount on R&D projects along with merit increases across the employee base
|
Product Development
|
á
|
Increased funding of various research projects and initiatives aimed at developing new products and technologies
|
Category
|
Key Drivers
|
|
Compensation & Benefits
|
á
|
Higher headcount on R&D projects along with merit increases across the employee base
|
Facilities
|
á
|
Higher costs as R&D personnel had not yet fully occupied our worldwide headquarters in fiscal 2015
|
Product Development
|
â
|
Lower prototype costs
|
Depreciation & Amortization
|
á
|
Higher depreciation primarily from laboratory equipment placed into service
|
|
Fiscal Year Ended
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|
$
|
%
|
|
$
|
%
|
Sales and marketing
|
$296,661
|
$295,267
|
$279,174
|
|
$1,394
|
—%
|
|
$16,093
|
6%
|
Percentage of total revenue
|
27%
|
29%
|
29%
|
|
|
|
|
|
|
Category
|
Key Drivers
|
|
Compensation & Benefits
|
á
|
Higher headcount and merit increases across the employee base
|
Legal, Professional, & Consulting
|
á
|
Higher costs associated with IP related activities aimed at revenue generation
|
Depreciation & Amortization
|
â
|
Lower amortization from assets that have been fully amortized
|
Stock-Based Compensation
|
â
|
Decrease in award grants
|
Marketing Programs
|
â
|
Lower costs associated with select tradeshow activities
|
Category
|
Key Drivers
|
|
Compensation & Benefits
|
á
|
Higher headcount primarily for programs to drive new revenue initiatives, along with merit increases across the employee base
|
Facilities
|
á
|
Higher costs as S&M personnel had not yet fully occupied our worldwide headquarters in fiscal 2015
|
Stock-Based Compensation
|
á
|
Higher headcount and an increase in award grants
|
Marketing Programs
|
â
|
Lower costs associated with selected marketing efforts
|
Legal, Professional, and Consulting
|
â
|
Lower costs associated with IP related activities aimed at revenue generation
|
|
Fiscal Year Ended
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|
$
|
%
|
|
$
|
%
|
General and administrative
|
$171,686
|
$168,854
|
$182,176
|
|
$2,832
|
2%
|
|
$(13,322)
|
(7)%
|
Percentage of total revenue
|
16%
|
16%
|
19%
|
|
|
|
|
|
|
Category
|
Key Drivers
|
|
Compensation & Benefits
|
á
|
Increase in headcount and merit increases across the employee base
|
Stock-Based Compensation
|
â
|
Decrease in award grants
|
Category
|
Key Drivers
|
|
Facilities
|
â
|
Lower costs as our worldwide headquarters included R&D and S&M departments starting in fiscal 2016
|
Stock-Based Compensation
|
â
|
Decrease in award grants
|
Legal, Professional, and Consulting
|
á
|
Higher costs associated with various legal activities
|
Depreciation & Amortization
|
â
|
Lower depreciation as fully depreciated assets were only partially offset by new assets placed in service
|
|
Fiscal Year Ended
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|
$
|
%
|
|
$
|
%
|
||||||
Restructuring
|
$12,856
|
$1,233
|
$(80)
|
|
$
|
11,623
|
|
943
|
%
|
|
$
|
1,313
|
|
(1,641
|
)%
|
Percentage of total revenue
|
1%
|
—%
|
—%
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
||||
Other Income/Expense
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|
$
|
%
|
|
$
|
%
|
Interest income
|
$9,577
|
$5,684
|
$4,544
|
|
$3,893
|
68%
|
|
$1,140
|
25%
|
Interest expense
|
(127)
|
(125)
|
(183)
|
|
(2)
|
2%
|
|
58
|
(32)%
|
Other income/(expense), net
|
(1,438)
|
(1,450)
|
28,193
|
|
12
|
(1)%
|
|
(29,643)
|
(105)%
|
Total
|
$8,012
|
$4,109
|
$32,554
|
|
$3,903
|
95%
|
|
$(28,445)
|
(87)%
|
Category
|
Key Drivers
|
|
Interest Income
|
á
|
Higher yields on our investment balances
|
Other Income/(Expense)
|
ßà
|
$2 million impairment charge recorded on a cost method investment, offset by lower currency translation losses and other expenses
|
Category
|
Key Drivers
|
|
Other Income/(Expense)
|
â
|
Pre-tax gain of $26.2 million from the sale of our ownership interest in a jointly-owned real estate entity in fiscal 2015 (refer to Note 16 to our consolidated financial statements for additional information)
|
â
|
Fiscal 2015 included the receipt of a non-recurring governmental grant
|
|
Interest Income
|
á
|
Higher yields on our investment balances
|
|
Fiscal Year Ended
|
||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
Provision for income taxes
|
$(54,217)
|
$(49,502)
|
$(62,542)
|
Effective tax rate
|
21%
|
21%
|
25%
|
Factor
|
Impact On Effective Tax Rate
|
|
Foreign Operations
|
â
|
Increased benefit from foreign earned income
|
Federal R&D Credits
|
á
|
Decreased benefits from federal R&D credits
|
Tax Contingencies
|
á
|
Prior year benefit from the settlement of a state audit
|
Factor
|
Impact On Effective Tax Rate
|
|
Tax Contingencies
|
â
|
Increased benefit from the settlement of a multi-year California tax audit
|
Federal R&D Credits
|
â
|
Increased benefit from federal R&D credits
|
|
September 29,
2017 |
|
September 30,
2016 |
||||
Cash and cash equivalents
|
$
|
627,017
|
|
|
$
|
516,112
|
|
Short-term investments
|
247,757
|
|
|
121,629
|
|
||
Long-term investments
|
314,364
|
|
|
393,904
|
|
||
Accounts receivable, net
|
73,750
|
|
|
75,688
|
|
||
Accounts payable and accrued liabilities
|
221,407
|
|
|
186,599
|
|
||
Working capital
|
765,661
|
|
|
546,647
|
|
|
Fiscal Year Ended
|
|||||
|
September 29,
2017 |
September 30,
2016 |
||||
Net cash provided by operating activities
|
$
|
371,051
|
|
$
|
356,839
|
|
Factor
|
Impact On Cash Flows
|
|
Net Income
|
á
|
Higher net income, partially offset by non-cash reconciling adjustments
|
Working Capital
|
á
|
Higher inflows primarily due to increase in accrued liabilities
|
|
Fiscal Year Ended
|
|||||
|
September 29,
2017 |
September 30,
2016 |
||||
Net cash used in investing activities
|
$
|
(161,732
|
)
|
$
|
(282,497
|
)
|
Capital expenditures
|
(99,617
|
)
|
(100,762
|
)
|
Factor
|
Impact On Cash Flows
|
|
Purchase of Investments
|
á
|
Lower outflows for the purchase of marketable investment securities
|
Proceeds From Investments
|
â
|
Lower inflows from the sale & maturities of marketable investment securities
|
Purchase of Intangible Assets
|
á
|
Lower outflows for the purchase of patent portfolios
|
|
Fiscal Year Ended
|
|||||
|
September 29,
2017 |
September 30,
2016 |
||||
Net cash used in financing activities
|
$
|
(100,089
|
)
|
$
|
(88,761
|
)
|
Repurchase of common stock
|
(100,000
|
)
|
(100,854
|
)
|
Factor
|
Impact On Cash Flows
|
|
Dividend Payments
|
â
|
Higher outflows for payments of our quarterly cash dividend to common stockholders primarily as a result of a $0.02 per share increase compared to the prior fiscal year
|
Share Repurchases
|
â
|
Higher outflows resulting from increased volumes of common stock repurchases associated with tax witholdings on vesting of restricted stock
|
|
Payments Due By Fiscal Period
|
||||||||||||||
|
1 Year
|
2 - 3
Years |
4 - 5
Years |
More Than
5 Years |
Total
|
||||||||||
Naming rights
|
$
|
7,715
|
|
$
|
15,720
|
|
$
|
16,116
|
|
$
|
86,865
|
|
$
|
126,416
|
|
Operating leases
|
15,593
|
|
24,761
|
|
19,170
|
|
25,291
|
|
84,815
|
|
|||||
Purchase obligations
|
12,105
|
|
45,082
|
|
—
|
|
—
|
|
57,187
|
|
|||||
Donation commitments
|
255
|
|
6,622
|
|
244
|
|
958
|
|
8,079
|
|
|||||
Total
|
$
|
35,668
|
|
$
|
92,185
|
|
$
|
35,530
|
|
$
|
113,114
|
|
$
|
276,497
|
|
•
|
Australian Dollar
|
•
|
British Pound
|
•
|
Chinese Yuan
|
•
|
Euro
|
•
|
Indian Rupee
|
•
|
Japanese Yen
|
•
|
Korean Won
|
•
|
Polish Zloty
|
•
|
Russian Ruble
|
•
|
Singapore Dollar
|
•
|
Swedish Krona
|
|
|
|
September 29,
2017 |
September 30,
2016 |
||||
ASSETS
|
|
|
||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
627,017
|
|
$
|
516,112
|
|
Restricted cash
|
7,351
|
|
3,645
|
|
||
Short-term investments
|
247,757
|
|
121,629
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $2,967 and $2,370
|
73,750
|
|
75,688
|
|
||
Inventories
|
25,051
|
|
16,354
|
|
||
Prepaid expenses and other current assets
|
30,508
|
|
26,302
|
|
||
Total current assets
|
1,011,434
|
|
759,730
|
|
||
Long-term investments
|
314,364
|
|
393,904
|
|
||
Property, plant and equipment, net
|
485,275
|
|
443,656
|
|
||
Intangible assets, net
|
189,648
|
|
215,342
|
|
||
Goodwill
|
311,087
|
|
309,616
|
|
||
Deferred taxes
|
190,915
|
|
166,790
|
|
||
Other non-current assets
|
30,831
|
|
21,068
|
|
||
Total assets
|
$
|
2,533,554
|
|
$
|
2,310,106
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
||||
Current liabilities:
|
|
|
||||
Accounts payable
|
$
|
14,373
|
|
$
|
17,544
|
|
Accrued liabilities
|
207,034
|
|
169,055
|
|
||
Income taxes payable
|
1,216
|
|
2,304
|
|
||
Deferred revenue
|
23,150
|
|
24,180
|
|
||
Total current liabilities
|
245,773
|
|
213,083
|
|
||
Long-term deferred revenue
|
36,425
|
|
35,366
|
|
||
Other non-current liabilities
|
107,514
|
|
82,922
|
|
||
Total liabilities
|
389,712
|
|
331,371
|
|
||
|
|
|
||||
Stockholders’ equity:
|
|
|
||||
Class A, $0.001 par value, one vote per share, 500,000,000 shares authorized: 59,281,837 shares issued and outstanding at September 29, 2017 and 57,018,362 at September 30, 2016
|
58
|
|
57
|
|
||
Class B, $0.001 par value, ten votes per share, 500,000,000 shares authorized: 42,873,597 shares issued and outstanding at September 29, 2017 and 44,403,847 at September 30, 2016
|
43
|
|
44
|
|
||
Additional paid-in capital
|
61,331
|
|
42,032
|
|
||
Retained earnings
|
2,083,063
|
|
1,938,320
|
|
||
Accumulated other comprehensive (loss)
|
(7,753
|
)
|
(10,197
|
)
|
||
Total stockholders’ equity – Dolby Laboratories, Inc.
|
2,136,742
|
|
1,970,256
|
|
||
Controlling interest
|
7,100
|
|
8,479
|
|
||
Total stockholders’ equity
|
2,143,842
|
|
1,978,735
|
|
||
Total liabilities and stockholders’ equity
|
$
|
2,533,554
|
|
$
|
2,310,106
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Revenue:
|
|
|
|
||||||
Licensing
|
$
|
965,792
|
|
$
|
917,032
|
|
$
|
868,111
|
|
Products
|
95,290
|
|
90,543
|
|
83,904
|
|
|||
Services
|
20,372
|
|
18,163
|
|
18,623
|
|
|||
Total revenue
|
1,081,454
|
|
1,025,738
|
|
970,638
|
|
|||
|
|
|
|
||||||
Cost of revenue:
|
|
|
|
||||||
Cost of licensing
|
39,216
|
|
28,333
|
|
10,879
|
|
|||
Cost of products
|
61,256
|
|
64,853
|
|
70,490
|
|
|||
Cost of services
|
17,835
|
|
15,796
|
|
13,447
|
|
|||
Total cost of revenue
|
118,307
|
|
108,982
|
|
94,816
|
|
|||
|
|
|
|
||||||
Gross margin
|
963,147
|
|
916,756
|
|
875,822
|
|
|||
|
|
|
|
||||||
Operating expenses:
|
|
|
|
||||||
Research and development
|
233,312
|
|
219,607
|
|
201,324
|
|
|||
Sales and marketing
|
296,661
|
|
295,267
|
|
279,174
|
|
|||
General and administrative
|
171,686
|
|
168,854
|
|
182,176
|
|
|||
Restructuring charges/(credits)
|
12,856
|
|
1,233
|
|
(80
|
)
|
|||
Total operating expenses
|
714,515
|
|
684,961
|
|
662,594
|
|
|||
|
|
|
|
||||||
Operating income
|
248,632
|
|
231,795
|
|
213,228
|
|
|||
|
|
|
|
||||||
Other income/expense:
|
|
|
|
||||||
Interest income
|
9,577
|
|
5,684
|
|
4,544
|
|
|||
Interest expense
|
(127
|
)
|
(125
|
)
|
(183
|
)
|
|||
Other income/(expense), net
|
(1,438
|
)
|
(1,450
|
)
|
28,193
|
|
|||
Total other income
|
8,012
|
|
4,109
|
|
32,554
|
|
|||
|
|
|
|
||||||
Income before income taxes
|
256,644
|
|
235,904
|
|
245,782
|
|
|||
Provision for income taxes
|
(54,217
|
)
|
(49,502
|
)
|
(62,542
|
)
|
|||
Net income including controlling interest
|
202,427
|
|
186,402
|
|
183,240
|
|
|||
Less: net (income) attributable to controlling interest
|
(625
|
)
|
(542
|
)
|
(1,850
|
)
|
|||
Net income attributable to Dolby Laboratories, Inc.
|
$
|
201,802
|
|
$
|
185,860
|
|
$
|
181,390
|
|
|
|
|
|
||||||
Net income per share:
|
|
|
|
||||||
Basic
|
$
|
1.98
|
|
$
|
1.85
|
|
$
|
1.77
|
|
Diluted
|
$
|
1.95
|
|
$
|
1.81
|
|
$
|
1.75
|
|
Weighted-average shares outstanding:
|
|
|
|
||||||
Basic
|
101,784
|
|
100,717
|
|
102,354
|
|
|||
Diluted
|
103,286
|
|
102,424
|
|
103,862
|
|
|||
|
|
|
|
||||||
Related party rent expense:
|
|
|
|
||||||
Included in operating expenses
|
$
|
3,142
|
|
$
|
3,097
|
|
$
|
3,136
|
|
Included in net income attributable to controlling interest
|
$
|
702
|
|
$
|
706
|
|
$
|
4,091
|
|
|
|
|
|
||||||
Cash dividend declared per common share
|
$
|
0.58
|
|
$
|
0.50
|
|
$
|
0.42
|
|
Cash dividend paid per common share
|
$
|
0.56
|
|
$
|
0.48
|
|
$
|
0.40
|
|
|
Fiscal Year Ended
|
|||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|||
Net income including controlling interest
|
202,427
|
|
186,402
|
|
183,240
|
|
Other comprehensive income:
|
|
|
|
|||
Foreign currency translation adjustments, net of tax
|
3,653
|
|
85
|
|
(14,858
|
)
|
Unrealized gains/(losses) on available-for-sale securities, net of tax
|
(1,119
|
)
|
392
|
|
(155
|
)
|
Comprehensive income
|
204,961
|
|
186,879
|
|
168,227
|
|
Less: comprehensive (income)/loss attributable to controlling interest
|
(715
|
)
|
246
|
|
(1,326
|
)
|
Comprehensive income attributable to Dolby Laboratories, Inc.
|
204,246
|
|
187,125
|
|
166,901
|
|
|
Dolby Laboratories, Inc.
|
|
|
|||||||||||||||||||||||||
|
Class A
|
Class B
|
APIC
|
Retained
Earnings
|
AOCI
|
Total Stockholders’ Equity
|
Controlling
Interest
|
Total
|
||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
|
Amount
|
|||||||||||||||||||||||
Balance at September 26, 2014
|
50,659
|
|
51
|
|
51,610
|
|
52
|
|
46,415
|
|
1,660,485
|
|
3,014
|
|
1,710,017
|
|
21,631
|
|
1,731,648
|
|
||||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
181,390
|
|
—
|
|
181,390
|
|
1,850
|
|
183,240
|
|
||||||||
Currency translation adjustments, net of tax of $864
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(14,321
|
)
|
(14,321
|
)
|
(537
|
)
|
(14,858
|
)
|
||||||||
Unrealized losses on investments, net of tax of $(87)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(155
|
)
|
(155
|
)
|
—
|
|
(155
|
)
|
||||||||
Distributions to controlling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(5,615
|
)
|
(5,615
|
)
|
||||||||
Stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
67,069
|
|
—
|
|
—
|
|
67,069
|
|
—
|
|
67,069
|
|
||||||||
Repurchase of common stock
|
(2,939
|
)
|
(3
|
)
|
—
|
|
—
|
|
(107,346
|
)
|
—
|
|
—
|
|
(107,349
|
)
|
—
|
|
(107,349
|
)
|
||||||||
Cash dividends declared and paid on common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(41,018
|
)
|
—
|
|
(41,018
|
)
|
—
|
|
(41,018
|
)
|
||||||||
Tax (deficiency) from employee stock plans
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,484
|
)
|
—
|
|
—
|
|
(1,484
|
)
|
—
|
|
(1,484
|
)
|
||||||||
Common stock issued under employee stock plans
|
2,087
|
|
2
|
|
—
|
|
—
|
|
28,618
|
|
—
|
|
—
|
|
28,620
|
|
—
|
|
28,620
|
|
||||||||
Tax withholdings on vesting of restricted stock
|
(382
|
)
|
—
|
|
—
|
|
—
|
|
(15,708
|
)
|
—
|
|
—
|
|
(15,708
|
)
|
—
|
|
(15,708
|
)
|
||||||||
Common stock transfers - Class B to Class A
|
867
|
|
1
|
|
(867
|
)
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Exercise of class B stock options
|
—
|
|
—
|
|
—
|
|
—
|
|
7
|
|
—
|
|
—
|
|
7
|
|
—
|
|
7
|
|
||||||||
Deconsolidation of subsidiary
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(8,390
|
)
|
(8,390
|
)
|
||||||||
Balance at September 25, 2015
|
50,292
|
|
51
|
|
50,743
|
|
51
|
|
17,571
|
|
1,800,857
|
|
(11,462
|
)
|
1,807,068
|
|
8,939
|
|
1,816,007
|
|
||||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
185,860
|
|
—
|
|
185,860
|
|
542
|
|
186,402
|
|
||||||||
Currency translation adjustments, net of tax of $586
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
873
|
|
873
|
|
(788
|
)
|
85
|
|
||||||||
Unrealized gains on investments, net of tax of $49
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
392
|
|
392
|
|
—
|
|
392
|
|
||||||||
Distributions to controlling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(214
|
)
|
(214
|
)
|
||||||||
Stock-based compensation expense
|
—
|
|
—
|
|
—
|
|
—
|
|
66,985
|
|
—
|
|
—
|
|
66,985
|
|
—
|
|
66,985
|
|
||||||||
Repurchase of common stock
|
(2,616
|
)
|
(3
|
)
|
—
|
|
—
|
|
(100,851
|
)
|
—
|
|
—
|
|
(100,854
|
)
|
—
|
|
(100,854
|
)
|
||||||||
Cash dividends declared and paid on common stock
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(48,397
|
)
|
—
|
|
(48,397
|
)
|
—
|
|
(48,397
|
)
|
||||||||
Tax benefit from employee stock plans
|
—
|
|
—
|
|
—
|
|
—
|
|
850
|
|
—
|
|
—
|
|
850
|
|
—
|
|
850
|
|
||||||||
Common stock issued under employee stock plans
|
3,382
|
|
3
|
|
—
|
|
—
|
|
71,108
|
|
—
|
|
—
|
|
71,111
|
|
—
|
|
71,111
|
|
||||||||
Tax withholdings on vesting of restricted stock
|
(379
|
)
|
(1
|
)
|
—
|
|
—
|
|
(13,631
|
)
|
—
|
|
—
|
|
(13,632
|
)
|
—
|
|
(13,632
|
)
|
||||||||
Common stock transfers - Class B to Class A
|
6,339
|
|
7
|
|
(6,339
|
)
|
(7
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Balance at September 30, 2016
|
57,018
|
|
$
|
57
|
|
44,404
|
|
$
|
44
|
|
$
|
42,032
|
|
$
|
1,938,320
|
|
$
|
(10,197
|
)
|
$
|
1,970,256
|
|
$
|
8,479
|
|
$
|
1,978,735
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
201,802
|
|
|
|
201,802
|
|
625
|
|
202,427
|
|
||||||||
Currency translation adjustments, net of tax of $(621)
|
|
|
|
|
|
|
|
|
|
|
|
|
3,563
|
|
3,563
|
|
90
|
|
3,653
|
|
||||||||
Unrealized gains on investments, net of tax of $38
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,119
|
)
|
(1,119
|
)
|
|
|
(1,119
|
)
|
||||||||
Distributions to controlling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
(2,094
|
)
|
(2,094
|
)
|
||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
65,343
|
|
|
|
|
|
65,343
|
|
|
|
65,343
|
|
||||||||
Repurchase of common stock
|
(2,025
|
)
|
(2
|
)
|
|
|
|
|
(99,998
|
)
|
|
|
|
|
(100,000
|
)
|
|
|
(100,000
|
)
|
||||||||
Cash dividends declared and paid on common stock
|
|
|
|
|
|
|
|
|
|
|
(57,059
|
)
|
|
|
(57,059
|
)
|
|
|
(57,059
|
)
|
||||||||
Tax benefit from employee stock plans
|
|
|
|
|
|
|
|
|
1,634
|
|
|
|
|
|
1,634
|
|
|
|
1,634
|
|
||||||||
Common stock issued under employee stock plans
|
3,138
|
|
2
|
|
|
|
|
|
69,996
|
|
|
|
|
|
69,998
|
|
|
|
69,998
|
|
||||||||
Tax withholdings on vesting of restricted stock
|
(379
|
)
|
|
|
|
|
|
|
(17,676
|
)
|
|
|
|
|
(17,676
|
)
|
|
|
(17,676
|
)
|
||||||||
Common stock transfers - Class B to Class A
|
1,530
|
|
1
|
|
(1,530
|
)
|
(1
|
)
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
||||||||
Balance at September 29, 2017
|
59,282
|
|
$
|
58
|
|
42,874
|
|
$
|
43
|
|
$
|
61,331
|
|
$
|
2,083,063
|
|
$
|
(7,753
|
)
|
$
|
2,136,742
|
|
$
|
7,100
|
|
$
|
2,143,842
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Operating activities:
|
|
|
|
||||||
Net income including controlling interest
|
$
|
202,427
|
|
$
|
186,402
|
|
$
|
183,240
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
84,308
|
|
85,152
|
|
69,133
|
|
|||
Stock-based compensation
|
65,343
|
|
66,985
|
|
67,069
|
|
|||
Amortization of premium on investments
|
2,758
|
|
3,824
|
|
9,162
|
|
|||
Excess tax benefit from exercise of stock options
|
(6,742
|
)
|
(3,225
|
)
|
(2,544
|
)
|
|||
Provision for doubtful accounts
|
924
|
|
1,017
|
|
33
|
|
|||
Deferred income taxes
|
(29,368
|
)
|
(22,798
|
)
|
(14,484
|
)
|
|||
Gain on sale of ownership interest in subsidiary (pre-tax)
|
—
|
|
—
|
|
(26,221
|
)
|
|||
Other non-cash items affecting net income
|
2,886
|
|
1,779
|
|
5,125
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
||||||
Accounts receivable
|
1,041
|
|
24,886
|
|
(7,008
|
)
|
|||
Inventories
|
(11,922
|
)
|
(2,949
|
)
|
5,835
|
|
|||
Prepaid expenses and other assets
|
(12,411
|
)
|
(15,217
|
)
|
(3,595
|
)
|
|||
Accounts payable and other liabilities
|
44,453
|
|
2,834
|
|
(7,384
|
)
|
|||
Income taxes, net
|
26,950
|
|
17,265
|
|
21,767
|
|
|||
Deferred revenue
|
23
|
|
10,288
|
|
8,981
|
|
|||
Other non-current liabilities
|
381
|
|
596
|
|
268
|
|
|||
Net cash provided by operating activities
|
371,051
|
|
356,839
|
|
309,377
|
|
|||
|
|
|
|
||||||
Investing activities:
|
|
|
|
||||||
Purchases of investment securities
|
(289,530
|
)
|
(426,118
|
)
|
(392,936
|
)
|
|||
Proceeds from sales of investment securities
|
84,047
|
|
262,125
|
|
305,225
|
|
|||
Proceeds from maturities of investment securities
|
152,324
|
|
103,987
|
|
146,152
|
|
|||
Purchases of PP&E
|
(99,617
|
)
|
(100,762
|
)
|
(157,526
|
)
|
|||
Payments for business acquisitions, net of cash acquired
|
—
|
|
—
|
|
(93,516
|
)
|
|||
Purchase of intangible assets
|
(5,250
|
)
|
(121,020
|
)
|
(37,416
|
)
|
|||
Proceeds from sale of ownership interest in subsidiary, net
|
—
|
|
—
|
|
27,216
|
|
|||
Change in restricted cash
|
(3,706
|
)
|
(709
|
)
|
(794
|
)
|
|||
Net cash used in investing activities
|
(161,732
|
)
|
(282,497
|
)
|
(203,595
|
)
|
|||
|
|
|
|
||||||
Financing activities:
|
|
|
|
||||||
Proceeds from issuance of common stock
|
69,998
|
|
71,111
|
|
28,627
|
|
|||
Repurchase of common stock
|
(100,000
|
)
|
(100,854
|
)
|
(107,349
|
)
|
|||
Payment of cash dividend
|
(57,059
|
)
|
(48,397
|
)
|
(41,018
|
)
|
|||
Distribution to controlling interest
|
(2,094
|
)
|
(214
|
)
|
(5,615
|
)
|
|||
Excess tax benefit from exercise of stock options
|
6,742
|
|
3,225
|
|
2,544
|
|
|||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(17,676
|
)
|
(13,632
|
)
|
(15,708
|
)
|
|||
Net cash used in financing activities
|
(100,089
|
)
|
(88,761
|
)
|
(138,519
|
)
|
|||
|
|
|
|
||||||
Effect of foreign exchange rate changes on cash and cash equivalents
|
1,675
|
|
(1,395
|
)
|
(3,809
|
)
|
|||
Net increase/(decrease) in cash and cash equivalents
|
110,905
|
|
(15,814
|
)
|
(36,546
|
)
|
|||
Cash and cash equivalents at beginning of period
|
516,112
|
|
531,926
|
|
568,472
|
|
|||
Cash and cash equivalents at end of period
|
$
|
627,017
|
|
$
|
516,112
|
|
$
|
531,926
|
|
|
|
|
|
||||||
Supplemental disclosure:
|
|
|
|
||||||
Cash paid for income taxes, net of refunds received
|
$
|
56,760
|
|
$
|
55,085
|
|
$
|
51,881
|
|
|
|
|
|
||||||
Non-cash investing and financing activities:
|
|
|
|
||||||
Change in PP&E purchases unpaid at period-end
|
$
|
(9,613
|
)
|
$
|
(7,233
|
)
|
$
|
15,725
|
|
Purchase consideration payable for acquisition
|
$
|
—
|
|
$
|
—
|
|
$
|
95
|
|
•
|
Estimated selling prices for elements sold in ME revenue arrangements
|
•
|
Valuation allowances for accounts receivable
|
•
|
Carrying values of inventories and certain PP&E, goodwill, and intangible assets
|
•
|
Fair values of investments
|
•
|
Accrued liabilities, including liabilities for unrecognized tax benefits
|
•
|
Deferred income tax assets and liabilities
|
•
|
Stock-based compensation
|
PP&E Category
|
Useful Life
|
Computer equipment 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
|
Equipment provided under operating leases
|
Lesser of lease term or 15 years
|
Buildings and building improvements
|
20 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 when applicable, 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 theaters. 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 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Advertising and promotional costs
|
$
|
47,402
|
|
$
|
44,221
|
|
$
|
46,202
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Foreign currency transaction (losses)
|
$
|
(74
|
)
|
$
|
(474
|
)
|
$
|
(142
|
)
|
•
|
Estimating and recording royalty-based revenue earned from our licensees’ shipments in the same period in which those shipments occurred, rather than recognizing our royalty-based revenue in the quarter in which it is reported to us by our licensees, which is typically in the quarter after those shipments have occurred;
|
•
|
For certain transactions that have extended payment and minimum commitment terms with no further performance obligations, recognizing licensing revenues on contract execution instead of when the amounts are due and payable by the customer;
|
•
|
Specified performance obligations for which we have not historically had VSOE and which resulted in the deferral of significant revenue balances may accelerate revenue recognition as VSOE for the undelivered elements is no longer required to separately recognize revenue for the delivered elements;
|
•
|
Recording a one-time adjustment to retained earnings to reflect the loss of specified future revenues upon adoption.
|
Accounts Receivable, Net
|
September 29,
2017 |
|
September 30,
2016 |
||||
Trade accounts receivable
|
$
|
62,305
|
|
|
$
|
66,229
|
|
Accounts receivable from patent administration program customers
|
14,412
|
|
|
11,829
|
|
||
Accounts receivable, gross
|
76,717
|
|
|
78,058
|
|
||
Less: allowance for doubtful accounts
|
(2,967
|
)
|
|
(2,370
|
)
|
||
Total
|
$
|
73,750
|
|
|
$
|
75,688
|
|
Allowance for Doubtful Accounts
|
Beginning Balance
|
Charged to
G&A
|
Deductions
|
Ending Balance
|
||||||||
For fiscal year ended:
|
|
|
|
|
||||||||
September 25, 2015
|
$
|
1,615
|
|
$
|
33
|
|
$
|
(106
|
)
|
$
|
1,542
|
|
September 30, 2016
|
1,542
|
|
1,017
|
|
(189
|
)
|
2,370
|
|
||||
September 29, 2017
|
2,370
|
|
924
|
|
(327
|
)
|
2,967
|
|
Inventories
|
September 29,
2017 |
|
September 30,
2016 |
||||
Raw materials
|
$
|
6,812
|
|
|
$
|
3,526
|
|
Work in process
|
4,954
|
|
|
4,020
|
|
||
Finished goods
|
13,285
|
|
|
8,808
|
|
||
Total
|
$
|
25,051
|
|
|
$
|
16,354
|
|
Prepaid Expenses And Other Current Assets
|
September 29,
2017 |
|
September 30,
2016 |
||||
Prepaid expenses
|
$
|
16,681
|
|
|
$
|
13,440
|
|
Other current assets
|
11,383
|
|
|
11,578
|
|
||
Income tax receivable
|
2,444
|
|
|
1,284
|
|
||
Total
|
$
|
30,508
|
|
|
$
|
26,302
|
|
Accrued Liabilities
|
September 29,
2017 |
|
September 30,
2016 |
||||
Accrued royalties
|
$
|
2,274
|
|
|
$
|
1,939
|
|
Amounts payable to patent administration program partners
|
49,141
|
|
|
34,472
|
|
||
Accrued compensation and benefits
|
92,277
|
|
|
71,261
|
|
||
Accrued professional fees
|
5,530
|
|
|
6,528
|
|
||
Unpaid PP&E additions
|
10,096
|
|
|
17,100
|
|
||
Other accrued liabilities
|
47,716
|
|
|
37,755
|
|
||
Total
|
$
|
207,034
|
|
|
$
|
169,055
|
|
Other Non-Current Liabilities
|
September 29,
2017 |
|
September 30,
2016 |
||||
Supplemental retirement plan obligations
|
$
|
2,928
|
|
|
$
|
2,540
|
|
Non-current tax liabilities
|
91,013
|
|
|
68,254
|
|
||
Other liabilities
|
13,573
|
|
|
12,128
|
|
||
Total
|
$
|
107,514
|
|
|
$
|
82,922
|
|
(1)
|
Certificates of deposit include marketable securities and those with a maturity in excess of one year as of
September 29, 2017
are classified within long-term investments.
|
(2)
|
Other long-term investments as of
September 29, 2017
include a marketable equity security of
$0.4 million
, and other investments that are not carried at fair value including an equity method investment of
$0.6 million
and two cost method equity investments of
$3.0 million
and
$0.5 million
. During fiscal 2017, we recorded a write-off charge to reduce the carrying value of a cost method equity investment to zero in recognition of an other-than-temporary impairment.
|
(1)
|
Certificates of deposit include marketable securities and those with a maturity in excess of one year as of
September 30, 2016
are classified within long-term investments.
|
(2)
|
Other long-term investments as of
September 30, 2016
include a marketable equity security of
$0.4 million
, and other investments that are not carried at fair value including an equity method investment of
$0.5 million
and two cost method equity investments of
$2.0 million
and
$0.5 million
.
|
Asset Type
|
Primary Source
|
Update Frequency
|
Fair Value Methodology
|
Secondary Source
|
|
|
|
|
|
Level 1
|
|
|
|
|
Money Market Funds
|
Not Applicable
|
Daily
|
$1 per share
|
Not Applicable
|
U.S. Government Bonds
|
FT Interactive Data
|
Daily
|
Market Prices
|
Bloomberg
|
|
|
|
|
|
Level 2
|
|
|
|
|
Certificates of Deposit
|
ICE (Intercontinental Exchange)
|
Monthly
|
Market Prices
|
Bloomberg
|
Commercial Paper
|
U.S. Bank Pricing Unit
|
Daily
|
Matrix Pricing
|
Not Applicable
|
Corporate Bonds
|
ICE (Intercontinental Exchange)
|
Daily
|
Institutional Bond Quotes - evaluations based on various market and industry inputs
|
Bloomberg
|
Municipal Debt Securities
|
Standard & Poor's
|
Daily
|
Evaluations based on various market and industry inputs
|
ICE (Intercontinental Exchange) &
Bloomberg |
US Agency Securities
(1)
|
ICE (Intercontinental Exchange)
|
Daily
|
Institutional Bond Quotes - evaluations based on various market and industry inputs
|
Bloomberg
|
Int'l Government Bonds
|
ICE (Intercontinental Exchange)
Extel Financial Ltd |
Daily
|
Evaluations based on various market factors
|
Bloomberg
|
(1)
|
US Agency Securities were transferred from Level 1 to Level 2 in the fiscal 2017 fair value hierarchy as quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value may be used.
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||||||||||||||||
|
Less Than 12 Months
|
Greater Than 12 Months
|
|
Less Than 12 Months
|
Greater Than 12 Months
|
||||||||||||||||||||
Investment Type
|
Fair Value
|
Gross Unrealized Losses
|
Fair Value
|
Gross Unrealized Losses
|
|
Fair Value
|
Gross Unrealized Losses
|
Fair Value
|
Gross Unrealized Losses
|
||||||||||||||||
Certificate of deposit
|
$
|
19,750
|
|
$
|
(6
|
)
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
U.S. agency securities
|
19,713
|
|
(91
|
)
|
11,386
|
|
(108
|
)
|
|
22,988
|
|
(38
|
)
|
—
|
|
—
|
|
||||||||
Government bonds
|
15,029
|
|
(64
|
)
|
4,729
|
|
(49
|
)
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Commercial paper
|
4,292
|
|
(1
|
)
|
—
|
|
—
|
|
|
11,479
|
|
(10
|
)
|
—
|
|
—
|
|
||||||||
Corporate bonds
|
125,890
|
|
(251
|
)
|
109,806
|
|
(449
|
)
|
|
153,491
|
|
(280
|
)
|
1,000
|
|
—
|
|
||||||||
Municipal debt securities
|
26,749
|
|
(24
|
)
|
3,625
|
|
(10
|
)
|
|
35,625
|
|
(42
|
)
|
4,615
|
|
(5
|
)
|
||||||||
Total
|
$
|
211,423
|
|
$
|
(437
|
)
|
$
|
129,546
|
|
$
|
(616
|
)
|
|
$
|
223,583
|
|
$
|
(370
|
)
|
$
|
5,615
|
|
$
|
(5
|
)
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||||
Range of maturity
|
Amortized Cost
|
Fair Value
|
|
Amortized Cost
|
Fair Value
|
||||||||
Due within 1 year
|
$
|
251,649
|
|
$
|
251,530
|
|
|
$
|
135,886
|
|
$
|
135,884
|
|
Due in 1 to 2 years
|
213,555
|
|
213,154
|
|
|
225,679
|
|
225,953
|
|
||||
Due in 2 to 3 years
|
96,773
|
|
96,682
|
|
|
164,339
|
|
164,583
|
|
||||
Total
|
$
|
561,977
|
|
$
|
561,366
|
|
|
$
|
525,904
|
|
$
|
526,420
|
|
Property, Plant, & Equipment
|
September 29,
2017 |
|
September 30,
2016 |
||||
Land
|
$
|
43,364
|
|
|
$
|
43,325
|
|
Buildings and building improvements
|
281,196
|
|
|
251,700
|
|
||
Leasehold improvements
|
65,034
|
|
|
60,480
|
|
||
Machinery and equipment
|
98,437
|
|
|
88,943
|
|
||
Computer equipment and software
|
173,341
|
|
|
154,291
|
|
||
Furniture and fixtures
|
28,118
|
|
|
26,900
|
|
||
Equipment provided under operating leases
|
97,456
|
|
|
35,968
|
|
||
Construction-in-progress
|
3,673
|
|
|
32,576
|
|
||
Property, plant, and equipment, gross
|
790,619
|
|
|
694,183
|
|
||
Less: accumulated depreciation
|
(305,344
|
)
|
|
(250,527
|
)
|
||
Property, plant, & equipment, net
|
$
|
485,275
|
|
|
$
|
443,656
|
|
|
Goodwill
|
||
Balance at September 25, 2015
|
$
|
307,708
|
|
Translation adjustments
|
1,908
|
|
|
Balance at September 30, 2016
|
$
|
309,616
|
|
Translation adjustments
|
1,471
|
|
|
Balance at September 29, 2017
|
$
|
311,087
|
|
|
September 29, 2017
|
|
September 30, 2016
|
||||||||||||||||
Intangible Assets, Net
|
Cost
|
Accumulated
Amortization
|
Net
|
|
Cost
|
Accumulated
Amortization
|
Net
|
||||||||||||
Acquired patents and technology
|
$
|
299,707
|
|
$
|
(128,986
|
)
|
$
|
170,721
|
|
|
$
|
293,824
|
|
$
|
(101,711
|
)
|
$
|
192,113
|
|
Customer relationships
|
56,843
|
|
(38,368
|
)
|
18,475
|
|
|
56,821
|
|
(34,113
|
)
|
22,708
|
|
||||||
Other intangibles
|
22,742
|
|
(22,290
|
)
|
452
|
|
|
22,716
|
|
(22,195
|
)
|
521
|
|
||||||
Total
|
$
|
379,292
|
|
$
|
(189,644
|
)
|
$
|
189,648
|
|
|
$
|
373,361
|
|
$
|
(158,019
|
)
|
$
|
215,342
|
|
Fiscal Year
|
Amortization Expense
|
||
2018
|
$
|
25,581
|
|
2019
|
24,908
|
|
|
2020
|
24,445
|
|
|
2021
|
24,418
|
|
|
2022
|
22,191
|
|
|
Thereafter
|
68,105
|
|
|
Total
|
$
|
189,648
|
|
|
Shares
|
Weighted-Average
Exercise Price
|
Weighted-Average
Remaining
Contractual Life
|
Aggregate
Intrinsic
Value
(1)
|
|||||
|
(in thousands)
|
|
(in years)
|
(in thousands)
|
|||||
Options outstanding at September 30, 2016
|
8,690
|
|
$
|
35.98
|
|
|
|
||
Grants
|
1,934
|
|
46.88
|
|
|
|
|||
Exercises
|
(1,679
|
)
|
34.41
|
|
|
|
|||
Forfeitures and cancellations
|
(204
|
)
|
37.64
|
|
|
|
|||
Options outstanding at September 29, 2017
|
8,741
|
|
38.65
|
|
7.0
|
$
|
164,950
|
|
|
|
|
|
|
|
|||||
Options vested and expected to vest at September 29, 2017
|
8,342
|
|
38.44
|
|
6.7
|
159,235
|
|
||
|
|
|
|
|
|||||
Options exercisable at September 29, 2017
|
4,783
|
|
$
|
36.07
|
|
5.8
|
102,627
|
|
(1)
|
Aggregate intrinsic value is based on the closing price of our Class A common stock on
September 29, 2017
of
$57.52
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)
|
|
||||||
$24.60 - $28.90
|
785
|
|
3.6
|
$
|
28.21
|
|
|
813
|
|
$
|
27.64
|
|
$28.91 - $33.40
|
2,374
|
|
7.3
|
32.36
|
|
|
1,189
|
|
31.59
|
|
||
$33.41 - $37.33
|
110
|
|
5.4
|
35.37
|
|
|
85
|
|
35.03
|
|
||
$37.34 - $42.95
|
1,705
|
|
6.1
|
38.43
|
|
|
1,521
|
|
38.38
|
|
||
$42.96 - $47.45
|
3,374
|
|
8.0
|
44.30
|
|
|
1,125
|
|
43.12
|
|
||
$47.46 - $62.29
|
393
|
|
8.5
|
50.89
|
|
|
50
|
|
52.59
|
|
||
|
8,741
|
|
|
|
|
4,783
|
|
|
|
Shares
|
Weighted-Average
Grant Date
Fair Value
|
|||
|
(in thousands)
|
|
|||
Non-vested at September 30, 2016
|
2,872
|
|
$
|
40.16
|
|
Granted
|
1,218
|
|
46.80
|
|
|
Vested
|
(1,108
|
)
|
36.69
|
|
|
Forfeitures
|
(143
|
)
|
39.75
|
|
|
Non-vested at
September 29
, 2017
|
2,839
|
|
$
|
44.38
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Restricted stock units - vest date fair value
|
$
|
51,985
|
|
$
|
40,283
|
|
$
|
45,175
|
|
|
Fiscal Year Ended
|
|||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|||
Expected term (in years)
|
5.13
|
|
5.24
|
|
4.64
|
|
Risk-free interest rate
|
2.1
|
%
|
1.7
|
%
|
1.5
|
%
|
Expected stock price volatility
|
27.4
|
%
|
29.8
|
%
|
29.6
|
%
|
Dividend yield
|
1.1
|
%
|
1.4
|
%
|
0.9
|
%
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Stock options granted - weighted-average grant date fair value
|
$
|
11.39
|
|
$
|
8.49
|
|
$
|
10.54
|
|
Stock options exercised - intrinsic value
|
28,544
|
|
27,485
|
|
8,546
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Stock options
|
$
|
18,630
|
|
$
|
21,311
|
|
$
|
22,972
|
|
Restricted stock units
|
43,171
|
|
42,201
|
|
40,332
|
|
|||
Employee stock purchase plan
|
3,542
|
|
3,473
|
|
3,765
|
|
|||
Total stock-based compensation
|
65,343
|
|
66,985
|
|
67,069
|
|
|||
Benefit from income taxes
|
(18,959
|
)
|
(19,627
|
)
|
(19,606
|
)
|
|||
Total stock-based compensation, net of tax
|
$
|
46,384
|
|
$
|
47,358
|
|
$
|
47,463
|
|
|
Fiscal Year Ended
|
||||||||
Compensation Expense - By Classification
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Cost of products
|
$
|
946
|
|
$
|
859
|
|
$
|
949
|
|
Cost of services
|
512
|
|
547
|
|
457
|
|
|||
Research and development
|
18,497
|
|
17,771
|
|
18,682
|
|
|||
Sales and marketing
|
26,175
|
|
27,579
|
|
24,283
|
|
|||
General and administrative
|
19,213
|
|
20,229
|
|
22,698
|
|
|||
Total stock-based compensation
|
65,343
|
|
66,985
|
|
67,069
|
|
|||
Benefit from income taxes
|
(18,959
|
)
|
(19,627
|
)
|
(19,606
|
)
|
|||
Total stock-based compensation, net of tax
|
$
|
46,384
|
|
$
|
47,358
|
|
$
|
47,463
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Tax benefit - shares issued under ESPP
|
$
|
802
|
|
$
|
550
|
|
$
|
328
|
|
Authorization Period
|
Authorization Amount
|
||
Fiscal 2010: November 2009
|
$
|
250,000
|
|
Fiscal 2010: July 2010
|
300,000
|
|
|
Fiscal 2011: July 2011
|
250,000
|
|
|
Fiscal 2012: February 2012
|
100,000
|
|
|
Fiscal 2015: October 2014
|
200,000
|
|
|
Fiscal 2017: January 2017
|
200,000
|
|
|
Total
|
$
|
1,300,000
|
|
Quarterly Repurchase Activity
|
Shares
Repurchased
|
Cost
(1)
|
Average Price Paid Per Share
(2)
|
|||||
|
|
(in thousands)
|
|
|||||
Q1 - Quarter ended December 30, 2016
|
531,465
|
|
$
|
25,001
|
|
$
|
47.02
|
|
Q2 - Quarter ended March 31, 2017
|
519,917
|
|
24,999
|
|
48.07
|
|
||
Q3 - Quarter ended June 30, 2017
|
485,179
|
|
24,994
|
|
51.50
|
|
||
Q4 - Quarter ended September 29, 2017
|
488,909
|
|
25,006
|
|
51.13
|
|
||
Total
|
2,025,470
|
|
$
|
100,000
|
|
|
(1)
|
Cost of share repurchases includes the price paid per share and applicable commissions.
|
(2)
|
Average price paid per share excludes commission costs.
|
Fiscal Period
|
Declaration Date
|
Record Date
|
Payment Date
|
Cash Dividend Per Common Share
|
Dividend Payment
|
|||
Fiscal 2017
|
|
|
|
|
|
|
||
Q1 - Quarter ended December 30, 2016
|
January 25, 2017
|
February 6, 2017
|
February 15, 2017
|
$
|
0.14
|
|
$14.3 million
|
|
Q2 - Quarter ended March 31, 2017
|
April 26, 2017
|
May 8, 2017
|
May 16, 2017
|
$
|
0.14
|
|
$14.3 million
|
|
Q3 - Quarter ended June 30, 2017
|
July 24, 2017
|
August 7, 2017
|
August 15, 2017
|
$
|
0.14
|
|
$14.3 million
|
|
Q4 - Quarter ended September 29, 2017
|
October 25, 2017
|
November 6, 2017
|
November 15, 2017
|
$
|
0.16
|
|
$16.3 million
|
(1)
|
(1)
|
The dividend payment amount is estimated based on the number of shares of our Class A and Class B common stock that we estimate will be outstanding as of the Record Date.
|
|
Fiscal Year Ended
September 29, 2017
|
|
Fiscal Year Ended
September 30, 2016 |
||||||||||||||||
|
Investment Securities
|
Currency Translation Adjustments
|
Total
|
|
Investment Securities
|
Currency Translation Adjustments
|
Total
|
||||||||||||
Beginning Balance
|
$
|
742
|
|
$
|
(10,939
|
)
|
$
|
(10,197
|
)
|
|
$
|
350
|
|
$
|
(11,812
|
)
|
$
|
(11,462
|
)
|
Other comprehensive income before reclassifications:
|
|
|
|
|
|
|
|
||||||||||||
Unrealized gains/(losses) - investment securities
|
(1,062
|
)
|
|
|
(1,062
|
)
|
|
(220
|
)
|
|
(220
|
)
|
|||||||
Foreign currency translation gains/(losses)
(1)
|
|
|
4,184
|
|
4,184
|
|
|
|
287
|
|
287
|
|
|||||||
Income tax effect - benefit/(expense)
|
12
|
|
(621
|
)
|
(609
|
)
|
|
188
|
|
586
|
|
774
|
|
||||||
Net of tax
|
(1,050
|
)
|
3,563
|
|
2,513
|
|
|
(32
|
)
|
873
|
|
841
|
|
||||||
Amounts reclassified from AOCI into earnings:
|
|
|
|
|
|
|
|
||||||||||||
Realized gains/(losses) - investment securities
(1)
|
(95
|
)
|
|
|
(95
|
)
|
|
563
|
|
|
563
|
|
|||||||
Income tax effect - benefit/(expense)
(2)
|
26
|
|
|
|
26
|
|
|
(139
|
)
|
|
(139
|
)
|
|||||||
Net of tax
|
(69
|
)
|
—
|
|
(69
|
)
|
|
424
|
|
—
|
|
424
|
|
||||||
Net current-period other comprehensive income/(loss)
|
(1,119
|
)
|
3,563
|
|
2,444
|
|
|
392
|
|
873
|
|
1,265
|
|
||||||
Ending Balance
|
$
|
(377
|
)
|
$
|
(7,376
|
)
|
$
|
(7,753
|
)
|
|
$
|
742
|
|
$
|
(10,939
|
)
|
$
|
(10,197
|
)
|
(1)
|
Realized gains or losses, if any, from the sale of our AFS investment securities or from foreign currency translation adjustments are included within other income/expense, net in our consolidated statements of operations.
|
(2)
|
The income tax benefit or expense is included within provision for income taxes in our consolidated statements of operations.
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25, 2015
|
||||||
Numerator:
|
|
|
|
||||||
Net income attributable to Dolby Laboratories, Inc.
|
$
|
201,802
|
|
$
|
185,860
|
|
$
|
181,390
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
||||||
Weighted-average shares outstanding—basic
|
101,784
|
|
100,717
|
|
102,354
|
|
|||
Potential common shares from options to purchase common stock
|
1,098
|
|
1,013
|
|
811
|
|
|||
Potential common shares from restricted stock units
|
404
|
|
694
|
|
697
|
|
|||
Weighted-average shares outstanding—diluted
|
103,286
|
|
102,424
|
|
103,862
|
|
|||
|
|
|
|
||||||
Net income per share attributable to Dolby Laboratories, Inc.:
|
|
|
|
||||||
Basic
|
$
|
1.98
|
|
$
|
1.85
|
|
$
|
1.77
|
|
Diluted
|
$
|
1.95
|
|
$
|
1.81
|
|
$
|
1.75
|
|
|
|
|
|
||||||
Antidilutive awards excluded from calculation:
|
|
|
|
||||||
Stock options
|
160
|
|
2,971
|
|
4,270
|
|
|||
Restricted stock units
|
—
|
|
30
|
|
127
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
United States
|
$
|
28,221
|
|
$
|
37,223
|
|
$
|
17,091
|
|
Foreign
|
228,423
|
|
198,681
|
|
228,691
|
|
|||
Total
|
$
|
256,644
|
|
$
|
235,904
|
|
$
|
245,782
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Current:
|
|
|
|
||||||
Federal
|
$
|
30,719
|
|
$
|
19,226
|
|
$
|
24,262
|
|
State
|
610
|
|
521
|
|
130
|
|
|||
Foreign
|
55,531
|
|
52,492
|
|
52,461
|
|
|||
Total current
|
86,860
|
|
72,239
|
|
76,853
|
|
|||
|
|
|
|
||||||
Deferred:
|
|
|
|
||||||
Federal
|
(27,345
|
)
|
(19,540
|
)
|
(9,593
|
)
|
|||
State
|
(4,596
|
)
|
(3,451
|
)
|
(3,686
|
)
|
|||
Foreign
|
(702
|
)
|
254
|
|
(1,032
|
)
|
|||
Total deferred
|
(32,643
|
)
|
(22,737
|
)
|
(14,311
|
)
|
|||
Provision for income taxes
|
$
|
54,217
|
|
$
|
49,502
|
|
$
|
62,542
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Withholding taxes
|
$
|
48,012
|
|
$
|
45,151
|
|
$
|
45,372
|
|
|
Fiscal Year Ended
|
|||||
|
September 29,
2017 |
September 30,
2016 |
||||
Deferred income tax assets:
|
|
|
||||
Investments
|
$
|
2,327
|
|
$
|
972
|
|
Inventories
|
6,821
|
|
7,855
|
|
||
Net operating loss
|
2,806
|
|
2,818
|
|
||
Accrued expenses
|
19,732
|
|
16,497
|
|
||
Stock-based compensation
|
26,970
|
|
31,397
|
|
||
Revenue recognition
|
53,843
|
|
54,043
|
|
||
Depreciation and amortization
|
52,876
|
|
26,364
|
|
||
Research and development credits
|
15,504
|
|
12,837
|
|
||
Foreign tax credits
|
10,140
|
|
9,727
|
|
||
Translation adjustment
|
625
|
|
1,223
|
|
||
Other
|
6,696
|
|
9,473
|
|
||
Total gross deferred income tax assets
|
198,340
|
|
173,206
|
|
||
Less: valuation allowance
|
—
|
|
—
|
|
||
Total deferred income tax assets
|
198,340
|
|
173,206
|
|
||
|
|
|
||||
Deferred income tax liabilities:
|
|
|
||||
Intangibles
|
(2,277
|
)
|
(2,014
|
)
|
||
International earnings
|
(4,855
|
)
|
(4,097
|
)
|
||
Unrealized gain on investments
|
(293
|
)
|
(305
|
)
|
||
Deferred income tax assets, net (non-current)
|
$
|
190,915
|
|
$
|
166,790
|
|
|
Fiscal Year Ended
|
|||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|||
Federal statutory rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
State income taxes, net of federal effect
|
0.7
|
|
0.7
|
|
0.7
|
|
Stock-based compensation expense rate
|
1.4
|
|
1.5
|
|
1.7
|
|
Research and development tax credits
|
(3.7
|
)
|
(5.2
|
)
|
(3.0
|
)
|
Tax exempt interest
|
(0.1
|
)
|
(0.1
|
)
|
(0.2
|
)
|
U.S. manufacturing tax incentives
|
(0.8
|
)
|
(1.1
|
)
|
(0.3
|
)
|
Foreign rate differential
|
(11.7
|
)
|
(9.5
|
)
|
(9.1
|
)
|
Audit settlements
|
(0.6
|
)
|
(2.3
|
)
|
—
|
|
Other
|
0.9
|
|
2.0
|
|
0.6
|
|
Effective tax rate
|
21.1
|
%
|
21.0
|
%
|
25.4
|
%
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Beginning Balance
|
$
|
75,168
|
|
$
|
65,161
|
|
$
|
31,351
|
|
Gross increases - tax positions taken during prior years
|
308
|
|
4,343
|
|
507
|
|
|||
Gross decreases - tax positions taken during prior years
|
—
|
|
—
|
|
—
|
|
|||
Gross increases - tax positions taken during current year
|
26,724
|
|
26,585
|
|
34,293
|
|
|||
Gross decreases - settlements with tax authorities during current year
|
(1,101
|
)
|
(20,086
|
)
|
—
|
|
|||
Lapse of statute of limitations
|
(2,434
|
)
|
(835
|
)
|
(990
|
)
|
|||
Ending Balance
|
$
|
98,665
|
|
$
|
75,168
|
|
$
|
65,161
|
|
|
Fiscal Year Ended
|
|||||
|
September 29,
2017 |
September 30,
2016 |
||||
Accrued interest
|
$
|
3,733
|
|
$
|
1,936
|
|
Accrued penalties
|
55
|
|
53
|
|
||
Total
|
$
|
3,788
|
|
$
|
1,989
|
|
|
Severance and associated costs
|
||
Restructuring charges
|
$
|
12,856
|
|
Cash payments
|
(168
|
)
|
|
Non-cash and other adjustments
|
—
|
|
|
Balance at September 29, 2017
|
$
|
12,688
|
|
|
Severance and associated costs
|
||
Restructuring charges
|
$
|
1,294
|
|
Cash payments
|
(1,233
|
)
|
|
Non-cash and other adjustments
|
(61
|
)
|
|
Balance at September 30, 2016
|
$
|
—
|
|
|
Payments Due By Fiscal Period
|
||||||||||||||||||||
|
Fiscal
2018 |
Fiscal
2019 |
Fiscal
2020 |
Fiscal
2021 |
Fiscal
2022 |
Thereafter
|
Total
|
||||||||||||||
Naming rights
|
$
|
7,715
|
|
$
|
7,811
|
|
$
|
7,909
|
|
$
|
8,008
|
|
$
|
8,108
|
|
$
|
86,865
|
|
$
|
126,416
|
|
Operating leases
|
15,593
|
|
12,887
|
|
11,874
|
|
10,210
|
|
8,960
|
|
25,291
|
|
84,815
|
|
|||||||
Purchase obligations
|
12,105
|
|
24,072
|
|
21,010
|
|
—
|
|
—
|
|
—
|
|
57,187
|
|
|||||||
Donation commitments
|
255
|
|
6,300
|
|
322
|
|
122
|
|
122
|
|
958
|
|
8,079
|
|
|||||||
Total
|
$
|
35,668
|
|
$
|
51,070
|
|
$
|
41,115
|
|
$
|
18,340
|
|
$
|
17,190
|
|
$
|
113,114
|
|
$
|
276,497
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Total rent expense
|
$
|
15,091
|
|
$
|
13,288
|
|
$
|
15,349
|
|
Purchase Price Allocation
|
|
||
Current assets
|
$
|
17,231
|
|
Inventories
|
16,372
|
|
|
Intangible assets
|
45,600
|
|
|
Goodwill
|
39,672
|
|
|
Current liabilities
|
(11,653
|
)
|
|
Non-current liabilities
|
(8,820
|
)
|
|
Cash consideration paid to sellers
|
98,402
|
|
|
Add: contingent consideration
|
740
|
|
|
Total purchase consideration
|
$
|
99,142
|
|
Intangible Assets Acquired
|
Purchase Price Allocation
|
Weighted-Average Useful Life (Years)
|
Income Statement Classification: Amortization Expense
|
||
Customer relationships
|
$
|
25,600
|
|
10
|
Sales & Marketing
|
Developed technology
|
17,500
|
|
7.5
|
Cost of Sales
|
|
Trade name
|
1,300
|
|
1
|
Sales & Marketing
|
|
Backlog
|
1,200
|
|
1
|
Cost of Sales
|
|
Total
|
$
|
45,600
|
|
|
|
|
Fiscal Year Ended
|
||||||||
Location
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
United States
|
$
|
373,264
|
|
$
|
320,129
|
|
$
|
276,733
|
|
International
|
708,190
|
|
705,609
|
|
693,905
|
|
|||
Total revenue
|
$
|
1,081,454
|
|
$
|
1,025,738
|
|
$
|
970,638
|
|
|
Fiscal Year Ended
|
|||||
Location
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
|||
United States
|
35
|
%
|
31
|
%
|
29
|
%
|
South Korea
|
16
|
%
|
17
|
%
|
21
|
%
|
China
|
16
|
%
|
14
|
%
|
7
|
%
|
Japan
|
12
|
%
|
12
|
%
|
13
|
%
|
Europe
|
11
|
%
|
14
|
%
|
13
|
%
|
Taiwan
|
4
|
%
|
4
|
%
|
10
|
%
|
Other
|
6
|
%
|
8
|
%
|
7
|
%
|
Total
|
100
|
%
|
100
|
%
|
100
|
%
|
Location
|
September 29,
2017 |
September 30,
2016 |
||||
United States
|
$
|
439,023
|
|
$
|
412,447
|
|
International
|
46,252
|
|
31,209
|
|
||
Total long-lived tangible assets, net of accumulated depreciation
|
$
|
485,275
|
|
$
|
443,656
|
|
Entity Name
|
Minority Ownership Interest
|
Location Of Properties
|
|
Dolby Properties Brisbane, LLC
|
49.0
|
%
|
Brisbane, California
|
Dolby Properties Burbank, LLC
|
49.0
|
%
|
Burbank, California
|
Dolby Properties UK, LLC
|
49.0
|
%
|
Wootton Bassett, England
|
Dolby Properties, LP
|
10.0
|
%
|
Wootton Bassett, England
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Related party rent expense included in operating expenses
|
$
|
3,142
|
|
$
|
3,097
|
|
$
|
3,136
|
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Distributions to principal stockholder
|
$
|
(2,094
|
)
|
$
|
(214
|
)
|
$
|
(5,615
|
)
|
Deconsolidation of Subsidiary
|
|
||
Cash consideration received
(1)
|
$
|
31,263
|
|
Less: net book value of Dolby Properties, LLC
|
(5,042
|
)
|
|
Gain on sale (pre-tax)
|
$
|
26,221
|
|
(1)
|
Net cash proceeds from the sale of
$27.2 million
as disclosed within our consolidated statements of cash flows is derived by deducting cash balances of
$4.1 million
held by the Subsidiary and acquired by the Purchaser from gross cash consideration received of
$31.3 million
.
|
|
Fiscal Year Ended
|
||||||||
|
September 29,
2017 |
September 30,
2016 |
September 25,
2015 |
||||||
Retirement plan expenses
|
$
|
22,035
|
|
$
|
20,471
|
|
$
|
19,431
|
|
|
Fiscal Year 2017
|
|
Fiscal Year 2016
|
||||||||||||||||||||||
|
Q1
|
Q2
|
Q3
|
Q4
|
|
Q1
|
Q2
|
Q3
|
Q4
|
||||||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Licensing
|
$
|
232,699
|
|
$
|
241,617
|
|
$
|
278,106
|
|
$
|
213,370
|
|
|
$
|
211,129
|
|
$
|
249,336
|
|
$
|
253,026
|
|
$
|
203,541
|
|
Products
|
28,211
|
|
20,713
|
|
22,569
|
|
23,797
|
|
|
24,809
|
|
20,063
|
|
20,638
|
|
25,033
|
|
||||||||
Services
|
5,357
|
|
5,144
|
|
4,990
|
|
4,881
|
|
|
4,876
|
|
4,941
|
|
3,923
|
|
4,423
|
|
||||||||
Total revenue
|
266,267
|
|
267,474
|
|
305,665
|
|
242,048
|
|
|
240,814
|
|
274,340
|
|
277,587
|
|
232,997
|
|
||||||||
Cost of revenue
|
29,967
|
|
26,977
|
|
32,125
|
|
29,238
|
|
|
29,766
|
|
24,373
|
|
24,621
|
|
30,222
|
|
||||||||
Gross margin
|
236,300
|
|
240,497
|
|
273,540
|
|
212,810
|
|
|
211,048
|
|
249,967
|
|
252,966
|
|
202,775
|
|
||||||||
Income before taxes and controlling interest
|
67,656
|
|
66,194
|
|
96,303
|
|
26,491
|
|
|
39,484
|
|
83,823
|
|
81,784
|
|
30,813
|
|
||||||||
Net income attributable to Dolby Laboratories
|
$
|
53,374
|
|
$
|
50,590
|
|
$
|
76,043
|
|
$
|
21,795
|
|
|
$
|
30,901
|
|
$
|
67,398
|
|
$
|
63,628
|
|
$
|
23,933
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
$
|
0.53
|
|
$
|
0.50
|
|
$
|
0.75
|
|
$
|
0.21
|
|
|
$
|
0.31
|
|
$
|
0.67
|
|
$
|
0.63
|
|
$
|
0.24
|
|
Diluted
|
$
|
0.51
|
|
$
|
0.49
|
|
$
|
0.73
|
|
$
|
0.21
|
|
|
$
|
0.30
|
|
$
|
0.66
|
|
$
|
0.62
|
|
$
|
0.23
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
101,483
|
|
101,787
|
|
101,905
|
|
101,959
|
|
|
100,734
|
|
100,456
|
|
100,533
|
|
101,145
|
|
||||||||
Diluted
|
103,876
|
|
103,883
|
|
104,222
|
|
103,530
|
|
|
101,931
|
|
101,555
|
|
102,677
|
|
103,766
|
|
Executive Officers
|
Age
|
Position(s)
|
Kevin Yeaman
|
51
|
President and Chief Executive Officer
|
Lewis Chew
|
54
|
Executive Vice President and Chief Financial Officer
|
Andy Sherman
|
50
|
Executive Vice President, General Counsel and Corporate Secretary
|
Robert Borchers
|
52
|
Senior Vice President, Chief Marketing Officer
|
Steven Forshay
|
63
|
Senior Vice President, Advanced Technology Group
|
1.
|
Financial Statements: See “Index to Consolidated Financial Statements” in Part II, Item 8 of this Annual Report on Form 10-K.
|
2.
|
Financial Statement Schedules: Financial statement schedules have been omitted as the information required is inapplicable or the information is presented in the consolidated financial statements and related notes
|
3.
|
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 16, 2017
|
Peter Gotcher
|
|
|
|
|
|
|
|
/S/ KEVIN J. YEAMAN
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
November 16, 2017
|
Kevin J. Yeaman
|
|
|
|
|
|
|
|
/S/ LEWIS CHEW
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
November 16, 2017
|
Lewis Chew
|
|
|
|
|
|
|
|
/S/ MICHELINE CHAU
|
|
Director
|
November 16, 2017
|
Micheline Chau
|
|
|
|
|
|
|
|
/S/ DAVID DOLBY
|
|
Director
|
November 16, 2017
|
David Dolby
|
|
|
|
|
|
|
|
/S/ NICHOLAS DONATIELLO, JR.
|
|
Director
|
November 16, 2017
|
Nicholas Donatiello, Jr.
|
|
|
|
|
|
|
|
/S/ N. W. JASPER, JR.
|
|
Director
|
November 16, 2017
|
N. W. Jasper, Jr.
|
|
|
|
|
|
|
|
/S/ SIMON SEGARS
|
|
Director
|
November 16, 2017
|
Simon Segars
|
|
|
|
|
|
|
|
/S/ ROGER SIBONI
|
|
Director
|
November 16, 2017
|
Roger Siboni
|
|
|
|
|
|
|
|
/S/ AVADIS TEVANIAN, JR.
|
|
Director
|
November 16, 2017
|
Avadis Tevanian, Jr.
|
|
|
|
19.
|
Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Change in Control
.
|
Name
|
Jurisdiction of Incorporation/Organization
|
Dolby Laboratories, Inc.
|
California
|
Dolby Laboratories Licensing Corporation
|
New York
|
Dolby International AB
|
Sweden
|
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/ KEVIN J. YEAMAN
|
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/ LEWIS CHEW
|
Lewis Chew
|
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
•
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
•
|
The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ KEVIN J. YEAMAN
|
Kevin J. Yeaman
President and Chief Executive Officer (Principal Executive Officer)
|
|
/s/ LEWIS CHEW
|
Lewis Chew
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|