ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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90-0199783
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1275 Market Street
San Francisco, CA
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94103-1410
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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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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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Abbreviation
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Term
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AAC
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Advanced Audio Coding
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AFS
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Available-For-Sale (Securities)
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AOCI
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Accumulated Other Comprehensive Income
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APIC
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Additional-Paid In-Capital
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ASC
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Accounting Standards Codification
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ASP
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Average Selling Price
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ASU
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Accounting Standards Update
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ATSC
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Advanced Television Systems Committee
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AVR
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Audio/Video Receiver
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CE
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Consumer Electronics
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CES
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Consumer Electronics Show
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CODM
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Chief Operating Decision Maker
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COGS
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Cost Of Goods Sold
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COSO
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Committee Of Sponsoring Organizations (Of The Treadway Commission)
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DD
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Dolby Digital®
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DD+
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Dolby Digital Plus™
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DMA
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Digital Media Adapter
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DTV
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Digital Television
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DVB
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Digital Video Broadcasting
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DVD
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Digital Versatile Disc
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EPS
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Earnings Per Share
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ESP
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Estimated Selling Price
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ESPP
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Employee Stock Purchase Plan
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FASB
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Financial Accounting Standards Board
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FCPA
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Foreign Corrupt Practices Act
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FIFO
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First-in, First-out
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G&A
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General & Administrative
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HD
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High Definition
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HDR
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High-Dynamic Range
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HDTV
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High Definition Television
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HE-AAC
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High Efficiency Advanced Audio Coding
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HEVC
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High Efficiency Video Coding
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HFR
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High Frame Rate
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HTIB
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Home Theater In-A-Box
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IC
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Integrated Circuit
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IMB
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Integrated Media Block
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IP
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Intellectual Property
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IPO
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Initial Public Offering
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IPTV
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Internet Protocol Television
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IT
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Information Technology
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LIFO
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Last-in, First-out
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LP
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Limited Partner/Partnership
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ME
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Multiple Element
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NOL
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Net Operating Loss
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OCI
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Other Comprehensive Income
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ODD
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Optical Disc Drive
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OECD
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Organization For Economic Co-Operation & Development
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OEM
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Original Equipment Manufacturer
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OLED
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Organic Light-Emitting Diode
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OTT
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Over-The-Top
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PC
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Personal Computer
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PCS
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Post-Contract Support
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PP&E
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Property, Plant, & Equipment
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PSO
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Performance-Based Stock Option
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R&D
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Research & Development
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RSU
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Restricted Stock Unit
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S&M
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Sales & Marketing
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SERP
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Supplemental Executive Retirement Plan
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SoC
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System(s)-On-A-Chip
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STB
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Set-Top Box
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TPE
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Third Party Evidence
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TSR
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Total Stockholder Return
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UHD
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Ultra High Definition
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U.S. GAAP
|
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Generally Accepted Accounting Principles In The United States
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VSOE
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Vendor Specific Objective Evidence
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June 29,
2018 |
September 29,
2017 |
||||
ASSETS
|
|
|
||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
829,621
|
|
$
|
627,017
|
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Restricted cash
|
7,842
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7,351
|
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Short-term investments
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195,284
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247,757
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|
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Accounts receivable, net of allowance for doubtful accounts of $5,622 and $2,967
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149,582
|
|
73,750
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|
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Inventories
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23,932
|
|
25,051
|
|
||
Prepaid expenses and other current assets
|
32,672
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30,508
|
|
||
Total current assets
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1,238,933
|
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1,011,434
|
|
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Long-term investments
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243,179
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314,364
|
|
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Property, plant, and equipment, net
|
502,041
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485,275
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|
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Intangible assets, net
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185,140
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189,648
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|
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Goodwill
|
314,317
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311,087
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|
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Deferred taxes
|
143,949
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190,915
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Other non-current assets
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42,260
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30,831
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Total assets
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$
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2,669,819
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$
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2,533,554
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||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
|
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|
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Accounts payable
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$
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16,970
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$
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14,373
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Accrued liabilities
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197,076
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207,034
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|
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Income taxes payable
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4,830
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1,216
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Deferred revenue
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21,436
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23,150
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|
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Total current liabilities
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240,312
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245,773
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|
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Long-term deferred revenue
|
37,775
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36,425
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Other non-current liabilities
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203,813
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107,514
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Total liabilities
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481,900
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389,712
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Stockholders’ equity:
|
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Class A, $0.001 par value, one vote per share, 500,000,000 shares authorized: 64,077,013 shares issued and outstanding at June 29, 2018 and 59,281,837 at September 29, 2017
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60
|
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58
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Class B, $0.001 par value, ten votes per share, 500,000,000 shares authorized: 39,511,036 shares issued and outstanding at June 29, 2018 and 42,873,597 at September 29, 2017
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43
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|
43
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Additional paid-in capital
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89,077
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61,331
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Retained earnings
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2,105,621
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2,083,063
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Accumulated other comprehensive (loss)
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(13,301
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)
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(7,753
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)
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Total stockholders’ equity – Dolby Laboratories, Inc.
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2,181,500
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2,136,742
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Controlling interest
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6,419
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7,100
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Total stockholders’ equity
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2,187,919
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2,143,842
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Total liabilities and stockholders’ equity
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$
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2,669,819
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$
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2,533,554
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Fiscal Quarter Ended
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Fiscal Year-To-Date Ended
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||||||||||
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June 29,
2018 |
June 30,
2017 |
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June 29,
2018 |
June 30,
2017 |
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Revenue:
|
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Licensing
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$
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286,325
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$
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278,106
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$
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817,484
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$
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752,422
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Products
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26,265
|
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22,569
|
|
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73,863
|
|
71,493
|
|
||||
Services
|
4,857
|
|
4,990
|
|
|
15,252
|
|
15,491
|
|
||||
Total revenue
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317,447
|
|
305,665
|
|
|
906,599
|
|
839,406
|
|
||||
|
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|
|
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|
||||||||
Cost of revenue:
|
|
|
|
|
|
||||||||
Cost of licensing
|
12,111
|
|
12,711
|
|
|
31,980
|
|
29,628
|
|
||||
Cost of products
|
17,213
|
|
14,910
|
|
|
49,851
|
|
46,618
|
|
||||
Cost of services
|
5,141
|
|
4,504
|
|
|
14,469
|
|
12,823
|
|
||||
Total cost of revenue
|
34,465
|
|
32,125
|
|
|
96,300
|
|
89,069
|
|
||||
|
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||||||||
Gross margin
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282,982
|
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273,540
|
|
|
810,299
|
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750,337
|
|
||||
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|
||||||||
Operating expenses:
|
|
|
|
|
|
||||||||
Research and development
|
60,357
|
|
59,631
|
|
|
176,294
|
|
175,490
|
|
||||
Sales and marketing
|
79,834
|
|
73,480
|
|
|
224,002
|
|
220,275
|
|
||||
General and administrative
|
48,081
|
|
44,497
|
|
|
147,113
|
|
129,290
|
|
||||
Restructuring credits
|
(82
|
)
|
—
|
|
|
(446
|
)
|
—
|
|
||||
Total operating expenses
|
188,190
|
|
177,608
|
|
|
546,963
|
|
525,055
|
|
||||
|
|
|
|
|
|
||||||||
Operating income
|
94,792
|
|
95,932
|
|
|
263,336
|
|
225,282
|
|
||||
|
|
|
|
|
|
||||||||
Other income/expense:
|
|
|
|
|
|
||||||||
Interest income
|
5,488
|
|
2,511
|
|
|
13,161
|
|
6,511
|
|
||||
Interest expense
|
(87
|
)
|
(31
|
)
|
|
(151
|
)
|
(94
|
)
|
||||
Other income/(expense), net
|
(3,603
|
)
|
(2,109
|
)
|
|
(5,439
|
)
|
(1,546
|
)
|
||||
Total other income
|
1,798
|
|
371
|
|
|
7,571
|
|
4,871
|
|
||||
|
|
|
|
|
|
||||||||
Income before income taxes
|
96,590
|
|
96,303
|
|
|
270,907
|
|
230,153
|
|
||||
Provision for income taxes
|
(13,302
|
)
|
(20,117
|
)
|
|
(198,332
|
)
|
(49,666
|
)
|
||||
Net income including controlling interest
|
83,288
|
|
76,186
|
|
|
72,575
|
|
180,487
|
|
||||
Less: net (income) attributable to controlling interest
|
(143
|
)
|
(143
|
)
|
|
(421
|
)
|
(480
|
)
|
||||
Net income attributable to Dolby Laboratories, Inc.
|
$
|
83,145
|
|
$
|
76,043
|
|
|
$
|
72,154
|
|
$
|
180,007
|
|
|
|
|
|
|
|
||||||||
Net income per share:
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.80
|
|
$
|
0.75
|
|
|
$
|
0.70
|
|
$
|
1.77
|
|
Diluted
|
$
|
0.78
|
|
$
|
0.73
|
|
|
$
|
0.67
|
|
$
|
1.73
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
||||||||
Basic
|
103,836
|
|
101,905
|
|
|
103,386
|
|
101,725
|
|
||||
Diluted
|
106,950
|
|
104,222
|
|
|
106,943
|
|
103,986
|
|
||||
|
|
|
|
|
|
||||||||
Related party rent expense:
|
|
|
|
|
|
||||||||
Included in operating expenses
|
$
|
1,017
|
|
$
|
784
|
|
|
$
|
2,585
|
|
$
|
2,359
|
|
Included in net income attributable to controlling interest
|
$
|
179
|
|
$
|
176
|
|
|
$
|
535
|
|
$
|
526
|
|
|
|
|
|
|
|
||||||||
Cash dividend declared per common share
|
$
|
0.16
|
|
$
|
0.14
|
|
|
$
|
0.48
|
|
$
|
0.42
|
|
Cash dividend paid per common share
|
$
|
0.16
|
|
$
|
0.14
|
|
|
$
|
0.48
|
|
$
|
0.42
|
|
|
Fiscal Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
||||||||||
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
||||||||
Net income including controlling interest
|
$
|
83,288
|
|
$
|
76,186
|
|
|
$
|
72,575
|
|
$
|
180,487
|
|
Other comprehensive income:
|
|
|
|
|
|
||||||||
Currency translation adjustments, net of tax
|
(8,297
|
)
|
3,267
|
|
|
(2,815
|
)
|
(12
|
)
|
||||
Unrealized gains/(losses) on investments, net of tax
|
339
|
|
75
|
|
|
(2,813
|
)
|
(1,363
|
)
|
||||
Comprehensive income
|
75,330
|
|
79,528
|
|
|
66,947
|
|
179,112
|
|
||||
Less: comprehensive (income)/loss attributable to controlling interest
|
130
|
|
(295
|
)
|
|
(341
|
)
|
(426
|
)
|
||||
Comprehensive income attributable to Dolby Laboratories, Inc.
|
$
|
75,460
|
|
$
|
79,233
|
|
|
$
|
66,606
|
|
$
|
178,686
|
|
|
Dolby Laboratories, Inc.
|
|
|
||||||||||||||||||
|
Common
Stock
|
Additional
Paid-In Capital |
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
Total Dolby
Laboratories,
Inc.
|
Controlling
Interest
|
Total
|
||||||||||||||
Balance at September 29, 2017
|
$
|
101
|
|
$
|
61,331
|
|
$
|
2,083,063
|
|
$
|
(7,753
|
)
|
$
|
2,136,742
|
|
$
|
7,100
|
|
$
|
2,143,842
|
|
Net income
|
|
|
|
|
72,154
|
|
|
|
72,154
|
|
421
|
|
72,575
|
|
|||||||
Currency translation adjustments, net of tax of $110
|
|
|
|
|
|
|
(2,735
|
)
|
(2,735
|
)
|
(80
|
)
|
(2,815
|
)
|
|||||||
Unrealized losses on investments, net of tax of $1
55
|
|
|
|
|
|
|
(2,813
|
)
|
(2,813
|
)
|
|
(2,813
|
)
|
||||||||
Distributions to controlling interest
|
|
|
|
|
|
|
|
|
—
|
|
(1,022
|
)
|
(1,022
|
)
|
|||||||
Stock-based compensation expense
|
|
|
53,476
|
|
|
|
|
|
53,476
|
|
|
|
53,476
|
|
|||||||
Repurchase of common stock
|
(1
|
)
|
(90,479
|
)
|
|
|
|
|
(90,480
|
)
|
|
|
(90,480
|
)
|
|||||||
Cash dividends declared and paid on common stock
|
|
|
|
|
(49,596
|
)
|
|
|
(49,596
|
)
|
|
|
(49,596
|
)
|
|||||||
Common stock issued under employee stock plans
|
3
|
|
85,938
|
|
|
|
|
|
85,941
|
|
|
|
85,941
|
|
|||||||
Tax withholdings on vesting of restricted stock
|
—
|
|
(21,189
|
)
|
|
|
|
|
(21,189
|
)
|
|
|
(21,189
|
)
|
|||||||
Balance at June 29, 2018
|
$
|
103
|
|
$
|
89,077
|
|
$
|
2,105,621
|
|
$
|
(13,301
|
)
|
$
|
2,181,500
|
|
$
|
6,419
|
|
$
|
2,187,919
|
|
|
Dolby Laboratories, Inc.
|
|
|
||||||||||||||||||
|
Common
Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income/(Loss)
|
Total Dolby
Laboratories,
Inc.
|
Controlling
Interest
|
Total
|
||||||||||||||
Balance at September 30, 2016
|
$
|
101
|
|
$
|
42,032
|
|
$
|
1,938,320
|
|
$
|
(10,197
|
)
|
$
|
1,970,256
|
|
$
|
8,479
|
|
$
|
1,978,735
|
|
Net income
|
|
|
|
|
180,007
|
|
|
|
180,007
|
|
480
|
|
180,487
|
|
|||||||
Currency translation adjustments, net of tax of $205
|
|
|
|
|
|
|
42
|
|
42
|
|
(54
|
)
|
(12
|
)
|
|||||||
Unrealized losses on investments, net of tax of $22
|
|
|
|
|
|
|
(1,363
|
)
|
(1,363
|
)
|
|
(1,363
|
)
|
||||||||
Distributions to controlling interest
|
|
|
|
|
|
|
|
|
—
|
|
(2,094
|
)
|
(2,094
|
)
|
|||||||
Stock-based compensation expense
|
|
|
48,940
|
|
|
|
|
|
48,940
|
|
|
|
48,940
|
|
|||||||
Repurchase of common stock
|
(2
|
)
|
(74,992
|
)
|
|
|
|
|
(74,994
|
)
|
|
|
(74,994
|
)
|
|||||||
Cash dividends declared and paid on common stock
|
|
|
|
|
(42,768
|
)
|
|
|
(42,768
|
)
|
|
|
(42,768
|
)
|
|||||||
Tax benefit from employee stock plans
|
|
|
4,558
|
|
|
|
|
|
4,558
|
|
|
|
4,558
|
|
|||||||
Common stock issued under employee stock plans
|
2
|
|
47,763
|
|
|
|
|
|
47,765
|
|
|
|
47,765
|
|
|||||||
Tax withholdings on vesting of restricted stock
|
|
|
(16,875
|
)
|
|
|
|
|
(16,875
|
)
|
|
|
(16,875
|
)
|
|||||||
Balance at June 30, 2017
|
$
|
101
|
|
$
|
51,426
|
|
$
|
2,075,559
|
|
$
|
(11,518
|
)
|
$
|
2,115,568
|
|
$
|
6,811
|
|
$
|
2,122,379
|
|
|
Fiscal Year-To-Date Ended
|
|||||
|
June 29,
2018 |
June 30,
2017 |
||||
Operating activities:
|
|
|
||||
Net income including controlling interest
|
$
|
72,575
|
|
$
|
180,487
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||
Depreciation and amortization
|
61,398
|
|
64,543
|
|
||
Stock-based compensation
|
53,476
|
|
48,940
|
|
||
Amortization of premium on investments
|
2,046
|
|
2,077
|
|
||
Provision for doubtful accounts
|
2,653
|
|
1,167
|
|
||
Deferred income taxes
|
47,145
|
|
(11,446
|
)
|
||
Other non-cash items affecting net income
|
5,147
|
|
2,547
|
|
||
Changes in operating assets and liabilities:
|
|
|
||||
Accounts receivable
|
(78,480
|
)
|
(7,576
|
)
|
||
Inventories
|
(508
|
)
|
(6,840
|
)
|
||
Prepaid expenses and other assets
|
(13,719
|
)
|
(10,657
|
)
|
||
Accounts payable and other liabilities
|
(12,781
|
)
|
14,877
|
|
||
Income taxes, net
|
102,422
|
|
19,033
|
|
||
Deferred revenue
|
(366
|
)
|
(560
|
)
|
||
Other non-current liabilities
|
(537
|
)
|
773
|
|
||
Net cash provided by operating activities
|
240,471
|
|
297,365
|
|
||
|
|
|
||||
Investing activities:
|
|
|
||||
Purchases of investment securities
|
(151,585
|
)
|
(204,447
|
)
|
||
Proceeds from sales of investment securities
|
72,090
|
|
36,579
|
|
||
Proceeds from maturities of investment securities
|
194,038
|
|
126,199
|
|
||
Purchases of PP&E
|
(54,869
|
)
|
(81,668
|
)
|
||
Payments for business acquisitions, net of cash acquired
|
(6,563
|
)
|
—
|
|
||
Purchase of intangible assets
|
(12,543
|
)
|
(5,250
|
)
|
||
Change in restricted cash
|
(491
|
)
|
(2,542
|
)
|
||
Net cash provided by (used in) investing activities
|
40,077
|
|
(131,129
|
)
|
||
|
|
|
||||
Financing activities:
|
|
|
||||
Proceeds from issuance of common stock
|
85,941
|
|
47,765
|
|
||
Repurchase of common stock
|
(90,480
|
)
|
(74,994
|
)
|
||
Payment of cash dividend
|
(49,596
|
)
|
(42,768
|
)
|
||
Distribution to controlling interest
|
(1,022
|
)
|
(2,094
|
)
|
||
Shares repurchased for tax withholdings on vesting of restricted stock
|
(21,189
|
)
|
(16,875
|
)
|
||
Net cash used in financing activities
|
(76,346
|
)
|
(88,966
|
)
|
||
|
|
|
||||
Effect of foreign exchange rate changes on cash and cash equivalents
|
(1,598
|
)
|
(766
|
)
|
||
Net increase in cash and cash equivalents
|
202,604
|
|
76,504
|
|
||
Cash and cash equivalents at beginning of period
|
627,017
|
|
516,112
|
|
||
Cash and cash equivalents at end of period
|
$
|
829,621
|
|
$
|
592,616
|
|
|
|
|
||||
Supplemental disclosure:
|
|
|
||||
Cash paid for income taxes, net of refunds received
|
$
|
48,931
|
|
$
|
44,694
|
|
|
|
|
||||
Non-cash investing activities:
|
|
|
||||
Net change in PP&E purchased and unpaid at period-end
|
$
|
4,820
|
|
$
|
(11,614
|
)
|
Purchase consideration payable for acquisition
|
$
|
750
|
|
$
|
—
|
|
Purchase consideration payable for intangibles
|
$
|
200
|
|
$
|
—
|
|
•
|
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;
|
•
|
Specified performance obligations for which we have not historically had VSOE and which resulted in the deferral of 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 cumulative impact of the changes noted above for the periods prior to adoption;
|
•
|
For certain transactions that have minimum commitment or fixed fee terms, recognizing licensing revenues on contract execution instead of as payments become due.
|
|
June 29,
2018 |
|
September 29,
2017 |
||||
Trade accounts receivable
|
$
|
131,916
|
|
|
$
|
62,305
|
|
Accounts receivable from patent administration program customers
|
23,288
|
|
|
14,412
|
|
||
Accounts receivable, gross
|
155,204
|
|
|
76,717
|
|
||
Less: allowance for doubtful accounts
|
(5,622
|
)
|
|
(2,967
|
)
|
||
Total
|
$
|
149,582
|
|
|
$
|
73,750
|
|
|
June 29,
2018 |
|
September 29,
2017 |
||||
Raw materials
|
$
|
4,202
|
|
|
$
|
6,812
|
|
Work in process
|
4,566
|
|
|
4,954
|
|
||
Finished goods
|
15,164
|
|
|
13,285
|
|
||
Total
|
$
|
23,932
|
|
|
$
|
25,051
|
|
|
June 29,
2018 |
|
September 29,
2017 |
||||
Prepaid expenses
|
$
|
17,941
|
|
|
$
|
16,681
|
|
Other current assets
|
14,079
|
|
|
11,383
|
|
||
Income tax receivable
|
652
|
|
|
2,444
|
|
||
Total
|
$
|
32,672
|
|
|
$
|
30,508
|
|
|
June 29,
2018 |
|
September 29,
2017 |
||||
Accrued royalties
|
$
|
2,764
|
|
|
$
|
2,274
|
|
Amounts payable to patent administration program partners
|
49,926
|
|
|
49,141
|
|
||
Accrued compensation and benefits
|
74,157
|
|
|
92,277
|
|
||
Accrued professional fees
|
7,632
|
|
|
5,530
|
|
||
Unpaid PP&E additions
|
13,130
|
|
|
10,096
|
|
||
Other accrued liabilities
|
49,467
|
|
|
47,716
|
|
||
Total
|
$
|
197,076
|
|
|
$
|
207,034
|
|
|
June 29,
2018 |
|
September 29,
2017 |
||||
Supplemental retirement plan obligations
|
$
|
3,220
|
|
|
$
|
2,928
|
|
Non-current tax liabilities
|
188,027
|
|
|
91,013
|
|
||
Other liabilities
|
12,566
|
|
|
13,573
|
|
||
Total
|
$
|
203,813
|
|
|
$
|
107,514
|
|
(1)
|
Certificates of deposit include marketable securities, while those with a maturity in excess of one year as of
June 29, 2018
are classified within long-term investments.
|
(2)
|
Other long-term investments as of
June 29, 2018
include a marketable equity security of
$0.3 million
, and other investments that are not carried at fair value including an equity method investment of
$0.4 million
and one cost method equity investment of
$0.5 million
. During the third quarter of fiscal 2018, 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, while 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
.
|
|
June 29, 2018
|
|
September 29, 2017
|
||||||||||
Range of maturity
|
Amortized Cost
|
Fair Value
|
|
Amortized Cost
|
Fair Value
|
||||||||
Due within 1 year
|
$
|
322,782
|
|
$
|
322,323
|
|
|
$
|
251,649
|
|
$
|
251,530
|
|
Due in 1 to 2 years
|
148,567
|
|
147,032
|
|
|
213,555
|
|
213,154
|
|
||||
Due in 2 to 3 years
|
96,380
|
|
94,975
|
|
|
96,773
|
|
96,682
|
|
||||
Total
|
$
|
567,729
|
|
$
|
564,330
|
|
|
$
|
561,977
|
|
$
|
561,366
|
|
|
June 29,
2018 |
|
September 29,
2017 |
||||
Land
|
$
|
43,339
|
|
|
$
|
43,364
|
|
Buildings and building improvements
|
283,459
|
|
|
281,196
|
|
||
Leasehold improvements
|
62,560
|
|
|
65,034
|
|
||
Machinery and equipment
|
104,643
|
|
|
98,437
|
|
||
Computer equipment and software
|
187,701
|
|
|
173,341
|
|
||
Furniture and fixtures
|
29,737
|
|
|
28,118
|
|
||
Equipment provided under operating leases
|
129,301
|
|
|
97,456
|
|
||
Construction-in-progress
|
11,115
|
|
|
3,673
|
|
||
Property, plant, and equipment, gross
|
851,855
|
|
|
790,619
|
|
||
Less: accumulated depreciation
|
(349,814
|
)
|
|
(305,344
|
)
|
||
Property, plant, & equipment, net
|
$
|
502,041
|
|
|
$
|
485,275
|
|
|
Goodwill
|
||
Balance at September 29, 2017
|
$
|
311,087
|
|
Acquired goodwill
|
4,807
|
|
|
Translation adjustments
|
(1,577
|
)
|
|
Balance at June 29, 2018
|
$
|
314,317
|
|
|
June 29, 2018
|
|
September 29, 2017
|
||||||||||||||||
Intangible Assets
|
Cost
|
Accumulated
Amortization
|
Net
|
|
Cost
|
Accumulated
Amortization
|
Net
|
||||||||||||
Acquired patents and technology
|
$
|
314,799
|
|
$
|
(146,549
|
)
|
$
|
168,250
|
|
|
$
|
299,707
|
|
$
|
(128,986
|
)
|
$
|
170,721
|
|
Customer relationships
|
56,836
|
|
(40,345
|
)
|
16,491
|
|
|
56,843
|
|
(38,368
|
)
|
18,475
|
|
||||||
Other intangibles
|
22,734
|
|
(22,335
|
)
|
399
|
|
|
22,742
|
|
(22,290
|
)
|
452
|
|
||||||
Total
|
$
|
394,369
|
|
$
|
(209,229
|
)
|
$
|
185,140
|
|
|
$
|
379,292
|
|
$
|
(189,644
|
)
|
$
|
189,648
|
|
Fiscal Period
|
Total Purchase Consideration
(1)
|
Weighted-Average
Useful Life
|
|
(in millions)
|
(in years)
|
Fiscal 2017
|
|
|
Q1 - Quarter ended December 30, 2016
|
None
|
|
Q2 - Quarter ended March 31, 2017
|
5.3
|
18.0
|
|
$5.3
|
18.0
|
Fiscal 2018
|
|
|
Q1 - Quarter ended December 29, 2017
|
$12.0
|
14.1
|
Q2 - Quarter ended March 30, 2018
|
$2.8
|
5.3
|
Q3 - Quarter ended June 29, 2018
|
$0.7
|
5.0
|
|
$15.5
|
12.1
|
Fiscal Year
|
Amortization Expense
|
||
Remainder of 2018
|
$
|
6,778
|
|
2019
|
26,525
|
|
|
2020
|
26,061
|
|
|
2021
|
26,034
|
|
|
2022
|
23,370
|
|
|
Thereafter
|
76,372
|
|
|
Total
|
$
|
185,140
|
|
|
Shares
|
Weighted-Average
Exercise Price
|
Weighted-Average
Remaining
Contractual Life
|
Aggregate
Intrinsic
Value
(1)
|
|||||
|
(in thousands)
|
|
(in years)
|
(in thousands)
|
|||||
Options outstanding at September 29, 2017
|
8,741
|
|
$
|
38.65
|
|
|
|
||
Grants
|
1,295
|
|
62.33
|
|
|
|
|||
Exercises
|
(1,938
|
)
|
37.20
|
|
|
|
|||
Forfeitures and cancellations
|
(382
|
)
|
40.43
|
|
|
|
|||
Options outstanding at June 29, 2018
|
7,716
|
|
42.90
|
|
6.75
|
$
|
145,793
|
|
|
Options vested and expected to vest at June 29, 2018
|
7,241
|
|
42.27
|
|
6.67
|
141,285
|
|
||
Options exercisable at June 29, 2018
|
4,123
|
|
$
|
37.61
|
|
5.81
|
99,275
|
|
(1)
|
Aggregate intrinsic value is based on the closing price of our Class A common stock on
June 29, 2018
of
$61.69
and excludes the impact of options that were not in-the-money.
|
|
Shares
|
Weighted-Average
Grant Date
Fair Value
|
|||
|
(in thousands)
|
|
|||
Non-vested at September 29, 2017
|
2,839
|
|
$
|
44.38
|
|
Granted
|
1,224
|
|
62.59
|
|
|
Vested
|
(1,002
|
)
|
40.53
|
|
|
Forfeitures
|
(302
|
)
|
44.15
|
|
|
Non-vested at June
29
, 2018
|
2,759
|
|
$
|
53.89
|
|
|
Fiscal Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
||||||
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
||||
Expected life (in years)
|
5.06
|
|
5.13
|
|
|
5.06
|
|
5.13
|
|
Risk-free interest rate
|
2.9
|
%
|
1.8
|
%
|
|
2.2
|
%
|
2.1
|
%
|
Expected stock price volatility
|
22.5
|
%
|
25.1
|
%
|
|
22.6
|
%
|
27.4
|
%
|
Dividend yield
|
1.0
|
%
|
1.1
|
%
|
|
1.1
|
%
|
1.1
|
%
|
|
Fiscal Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
||||||||||
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
||||||||
Compensation expense - by type
|
|
|
|
|
|
||||||||
Stock options
|
$
|
4,500
|
|
$
|
4,489
|
|
|
$
|
16,554
|
|
$
|
13,867
|
|
Restricted stock units
|
11,581
|
|
10,349
|
|
|
33,993
|
|
32,446
|
|
||||
Employee stock purchase plan
|
1,020
|
|
904
|
|
|
2,929
|
|
2,627
|
|
||||
Total stock-based compensation
|
17,101
|
|
15,742
|
|
|
53,476
|
|
48,940
|
|
||||
Benefit from income taxes
|
(3,488
|
)
|
(4,568
|
)
|
|
(11,041
|
)
|
(14,231
|
)
|
||||
Total stock-based compensation, net of tax
|
$
|
13,613
|
|
$
|
11,174
|
|
|
$
|
42,435
|
|
$
|
34,709
|
|
|
Fiscal Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
||||||||||
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
||||||||
Compensation expense - by classification
|
|
|
|
|
|||||||||
Cost of products
|
$
|
249
|
|
$
|
229
|
|
|
$
|
756
|
|
$
|
710
|
|
Cost of services
|
151
|
|
126
|
|
|
411
|
|
383
|
|
||||
Research and development
|
4,859
|
|
4,551
|
|
|
14,486
|
|
13,987
|
|
||||
Sales and marketing
|
6,469
|
|
6,187
|
|
|
18,266
|
|
19,563
|
|
||||
General and administrative
|
5,373
|
|
4,649
|
|
|
19,557
|
|
14,297
|
|
||||
Total stock-based compensation expense
|
17,101
|
|
15,742
|
|
|
53,476
|
|
48,940
|
|
||||
Benefit from income taxes
|
(3,488
|
)
|
(4,568
|
)
|
|
(11,041
|
)
|
(14,231
|
)
|
||||
Total stock-based compensation, net of tax
|
$
|
13,613
|
|
$
|
11,174
|
|
|
$
|
42,435
|
|
$
|
34,709
|
|
|
Fiscal Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
||||||||||
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
||||||||
Tax benefit - shares issued under ESPP
|
$
|
113
|
|
$
|
367
|
|
|
$
|
470
|
|
$
|
786
|
|
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 in thousands
(1)
|
Average Price Paid Per Share
(2)
|
|||||
|
|
|
|
|||||
Q1 - Quarter ended December 29, 2017
|
493,884
|
|
$
|
29,999
|
|
$
|
60.73
|
|
Q2 - Quarter ended March 30, 2018
|
77,705
|
|
5,001
|
|
64.33
|
|
||
Q3 - Quarter ended June 29, 2018
|
896,689
|
|
55,480
|
|
61.86
|
|
||
Total
|
1,468,278
|
|
$
|
90,480
|
|
|
(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
|
Announcement Date
|
Record Date
|
Payment Date
|
Cash Dividend Per Common Share
|
Dividend Payment
|
|
||
Fiscal 2018
|
|
|
|
|
|
|
||
Q1 - Quarter ended December 29, 2017
|
January 24, 2018
|
February 5, 2018
|
February 14, 2018
|
$
|
0.16
|
|
$16.6 million
|
|
Q2 - Quarter ended March 30, 2018
|
April 24, 2018
|
May 7, 2018
|
May 16, 2018
|
$
|
0.16
|
|
$16.7 million
|
|
Q3 - Quarter ended June 29, 2018
|
July 24, 2018
|
August 6, 2018
|
August 14, 2018
|
$
|
0.16
|
|
$16.6 million
|
(1)
|
(1)
|
The amount of the dividend payment 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 Quarter Ended
June 29, 2018 |
|
Fiscal Year-To-Date Ended
June 29, 2018 |
||||||||||||||||
|
Investment Securities
|
Currency Translation Adjustments
|
Total
|
|
Investment Securities
|
Currency Translation Adjustments
|
Total
|
||||||||||||
Beginning Balance
|
$
|
(3,529
|
)
|
$
|
(2,087
|
)
|
$
|
(5,616
|
)
|
|
$
|
(377
|
)
|
$
|
(7,376
|
)
|
$
|
(7,753
|
)
|
Other comprehensive income before reclassifications:
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|||||||
Unrealized gains/(losses) - investment securities
|
490
|
|
|
|
490
|
|
|
(2,599
|
)
|
—
|
|
(2,599
|
)
|
||||||
Foreign currency translation gains/(losses)
(1)
|
|
|
(9,275
|
)
|
(9,275
|
)
|
|
—
|
|
(2,845
|
)
|
(2,845
|
)
|
||||||
Income tax effect - benefit/(expense)
|
(21
|
)
|
1,251
|
|
1,230
|
|
|
82
|
|
110
|
|
192
|
|
||||||
Net of tax
|
469
|
|
(8,024
|
)
|
(7,555
|
)
|
|
(2,517
|
)
|
(2,735
|
)
|
(5,252
|
)
|
||||||
Amounts reclassified from AOCI into earnings:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Realized gains/(losses) - investment securities
(1)
|
(162
|
)
|
|
|
(162
|
)
|
|
(369
|
)
|
|
|
(369
|
)
|
||||||
Income tax effect - benefit/(expense)
(2)
|
32
|
|
|
|
32
|
|
|
73
|
|
|
|
73
|
|
||||||
Net of tax
|
(130
|
)
|
—
|
|
(130
|
)
|
|
(296
|
)
|
—
|
|
(296
|
)
|
||||||
Net current-period other comprehensive income/(loss)
|
339
|
|
(8,024
|
)
|
(7,685
|
)
|
|
(2,813
|
)
|
(2,735
|
)
|
(5,548
|
)
|
||||||
Ending Balance
|
$
|
(3,190
|
)
|
$
|
(10,111
|
)
|
$
|
(13,301
|
)
|
|
$
|
(3,190
|
)
|
$
|
(10,111
|
)
|
$
|
(13,301
|
)
|
|
Fiscal Quarter Ended
June 30, 2017 |
|
Fiscal Year-To-Date
June 30, 2017 |
||||||||||||||||
|
Investment Securities
|
Currency Translation Adjustments
|
Total
|
|
Investment Securities
|
Currency Translation Adjustments
|
Total
|
||||||||||||
Beginning Balance
|
$
|
(696
|
)
|
$
|
(14,012
|
)
|
$
|
(14,708
|
)
|
|
$
|
742
|
|
$
|
(10,939
|
)
|
$
|
(10,197
|
)
|
Other comprehensive income before reclassifications:
|
|
|
|
|
|
|
|
|
|
||||||||||
Unrealized gains/(losses) - investment securities
|
67
|
|
|
|
67
|
|
|
(1,407
|
)
|
|
|
(1,407
|
)
|
||||||
Foreign currency translation gains/(losses)
(1)
|
|
|
3,576
|
|
3,576
|
|
|
|
|
(163
|
)
|
(163
|
)
|
||||||
Income tax effect - benefit/(expense)
|
17
|
|
(461
|
)
|
(444
|
)
|
|
20
|
|
205
|
|
225
|
|
||||||
Net of tax
|
84
|
|
3,115
|
|
3,199
|
|
|
(1,387
|
)
|
42
|
|
(1,345
|
)
|
||||||
Amounts reclassified from AOCI into earnings:
|
|
|
|
|
|
|
|
||||||||||||
Realized gains/(losses) - investment securities
(1)
|
(12
|
)
|
|
|
(12
|
)
|
|
22
|
|
|
|
22
|
|
||||||
Income tax effect - benefit/(expense)
(2)
|
3
|
|
|
|
3
|
|
|
2
|
|
|
|
2
|
|
||||||
Net of tax
|
(9
|
)
|
—
|
|
(9
|
)
|
|
24
|
|
—
|
|
24
|
|
||||||
Net current-period other comprehensive income/(loss)
|
75
|
|
3,115
|
|
3,190
|
|
|
(1,363
|
)
|
42
|
|
(1,321
|
)
|
||||||
Ending Balance
|
$
|
(621
|
)
|
$
|
(10,897
|
)
|
$
|
(11,518
|
)
|
|
$
|
(621
|
)
|
$
|
(10,897
|
)
|
$
|
(11,518
|
)
|
(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 Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
||||||||||
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
||||||||
Numerator:
|
|
|
|
|
|
||||||||
Net income attributable to Dolby Laboratories, Inc.
|
$
|
83,145
|
|
$
|
76,043
|
|
|
$
|
72,154
|
|
$
|
180,007
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding—basic
|
103,836
|
|
101,905
|
|
|
103,386
|
|
101,725
|
|
||||
Potential common shares from options to purchase common stock
|
2,198
|
|
1,571
|
|
|
2,364
|
|
1,494
|
|
||||
Potential common shares from restricted stock units
|
916
|
|
746
|
|
|
1,193
|
|
767
|
|
||||
Weighted-average shares outstanding—diluted
|
106,950
|
|
104,222
|
|
|
106,943
|
|
103,986
|
|
||||
|
|
|
|
|
|
||||||||
Net income per share attributable to Dolby Laboratories, Inc.:
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.80
|
|
$
|
0.75
|
|
|
$
|
0.70
|
|
$
|
1.77
|
|
Diluted
|
$
|
0.78
|
|
$
|
0.73
|
|
|
$
|
0.67
|
|
$
|
1.73
|
|
|
|
|
|
|
|
||||||||
Antidilutive awards excluded from calculation:
|
|
|
|
|
|
||||||||
Stock options
|
1,292
|
|
1,757
|
|
|
950
|
|
1,429
|
|
||||
Restricted stock units
|
44
|
|
—
|
|
|
16
|
|
10
|
|
•
|
Remeasurement of net deferred tax assets: The Tax Act reduces the corporate tax rate from
35 percent
to
21 percent
, which results in an estimated net decrease of
$57.9 million
in our net deferred tax asset balance. While we are able to make a reasonable estimate of the impact of the reduced corporate tax rate on our net deferred tax asset balances, we are continuing to gather additional information to assess the impact.
|
•
|
Deemed Repatriation Transition Tax: The Deemed Repatriation Transition Tax ("Transition Tax") is a tax on certain unrepatriated earnings of our foreign subsidiaries. To determine the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-1986 earnings and profits of the relevant subsidiaries, as well as the amount of foreign income taxes paid on such earnings and profits. The portion of earnings and profits comprised of cash and other specified assets is taxed at a rate of 15.5 percent and any remaining amount of earnings and profits is taxed at a rate of eight percent. We made a reasonable estimate of the Transition Tax and recorded a liability for a provisional Transition Tax obligation of
$96.7 million
payable
|
|
Fiscal Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
||||||||||
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
||||||||
Withholding taxes
|
$
|
10,366
|
|
$
|
12,381
|
|
|
$
|
38,940
|
|
$
|
34,780
|
|
|
Severance and associated costs
|
||
Restructuring charges
|
$
|
12,856
|
|
Cash payments
|
(168
|
)
|
|
Non-cash and other adjustments
|
—
|
|
|
Balance at September 29, 2017
|
$
|
12,688
|
|
Restructuring charges
|
23
|
|
|
Cash payments
|
(11,946
|
)
|
|
Non-cash and other adjustments
|
(583
|
)
|
|
Balance at June 29, 2018
|
$
|
182
|
|
|
Payments Due By Fiscal Period
|
||||||||||||||||||||
|
Remainder of
Fiscal 2018 |
Fiscal
2019 |
Fiscal
2020 |
Fiscal
2021 |
Fiscal
2022 |
Thereafter
|
Total
|
||||||||||||||
Naming rights
|
$
|
—
|
|
$
|
7,811
|
|
$
|
7,909
|
|
$
|
8,008
|
|
$
|
8,108
|
|
$
|
86,865
|
|
$
|
118,701
|
|
Operating leases
|
4,484
|
|
17,105
|
|
14,381
|
|
11,105
|
|
9,524
|
|
25,698
|
|
82,297
|
|
|||||||
Purchase obligations
|
32,872
|
|
25,536
|
|
22,225
|
|
433
|
|
333
|
|
—
|
|
81,399
|
|
|||||||
Donation commitments
|
—
|
|
6,300
|
|
322
|
|
122
|
|
122
|
|
958
|
|
7,824
|
|
|||||||
Total
|
$
|
37,356
|
|
$
|
56,752
|
|
$
|
44,837
|
|
$
|
19,668
|
|
$
|
18,087
|
|
$
|
113,521
|
|
$
|
290,221
|
|
|
Fiscal Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
||
Revenue
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
Licensing
|
90%
|
91%
|
|
90%
|
90%
|
Products
|
8%
|
7%
|
|
8%
|
8%
|
Services
|
2%
|
2%
|
|
2%
|
2%
|
Total
|
100%
|
100%
|
|
100%
|
100%
|
|
Fiscal Year-To-Date Ended
|
|
Revenue By Geographic Location
|
June 29,
2018 |
June 30,
2017 |
United States
|
27%
|
32%
|
International
|
73%
|
68%
|
Technology
|
Description
|
AAC & HE-AAC
|
An advanced digital audio codec solution with higher bandwidth efficiency used for a wide range of media applications such as TVs, STBs, PCs, gaming consoles, mobile devices, and digital radio.
|
AVC
|
A digital video codec with high bandwidth efficiency used in a wide range of media devices, such as TVs, STBs, PCs, gaming consoles, and mobile devices.
|
Dolby® AC-4
|
A next-generation digital audio coding technology that increases transmission efficiency while delivering new audio experiences to a wide range of playback devices, including TVs, STBs, PCs, gaming consoles, and mobile devices.
|
Dolby Atmos®
|
An object-oriented audio technology for home theaters, cinema, device speakers, mobile devices, and headphones that allows sound to be precisely placed and moved anywhere in the listening environment including the overhead dimension. Dolby Atmos is an immersive experience that can be provided via multiple Dolby audio coding technologies.
|
Dolby Digital®
|
A digital audio coding technology that provides multichannel sound to applications such as DVD players, TVs, and STBs.
|
Dolby Digital Plus™
|
An advanced digital audio coding technology that offers more efficient audio transmission for a wide range of media applications such as TVs, STBs, Blu-ray Discs, PCs, and mobile devices.
|
Dolby® TrueHD
|
A digital audio coding technology providing lossless encoding for premium quality media applications such as Blu-ray Discs and home theaters.
|
Dolby Vision™
|
An imaging technology combining high dynamic range and dynamic metadata to deliver higher color contrast, brighter highlights, and improved details for cinema and consumer devices.
|
Dolby Voice®
|
An audio conferencing technology with superior spatial perception, voice clarity, and background noise reduction that emulates the in-person meeting experience.
|
HEVC
|
A next-generation digital video codec with high bandwidth efficiency to support ultra-high definition experiences for a wide range of media devices.
|
|
Fiscal Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
|
||
Market
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
Main Offerings Incorporating Our Technologies
|
Broadcast
|
33%
|
37%
|
|
37%
|
42%
|
STBs & Televisions
|
Mobile
|
23%
|
20%
|
|
22%
|
14%
|
Smartphones & Tablets
|
CE
|
14%
|
14%
|
|
13%
|
13%
|
DMAs, Blu-ray Disc devices, AVRs, Soundbars, DVDs, & HTIBs
|
PC
|
17%
|
17%
|
|
13%
|
16%
|
Windows and macOS operating systems
|
Other
|
13%
|
12%
|
|
15%
|
15%
|
Gaming consoles, Auto DVD, Dolby Cinema, Dolby Voice
|
Total
|
100%
|
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 full-room voice capture, spatial voice separation, and playback.
|
Dolby Voice Room
|
Video conferencing solution for huddle rooms and small conference rooms that combines a camera product with the Dolby Conference Phone.
|
|
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.
|
|
Fiscal Quarter Ended
|
Change
|
|
Fiscal Year-To-Date Ended
|
Change
|
||||
Licensing
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
Revenue
|
$286,325
|
$278,106
|
$8,219
|
3%
|
|
$817,484
|
$752,422
|
$65,062
|
9%
|
Percentage of total revenue
|
90%
|
91%
|
|
|
|
90%
|
90%
|
|
|
Cost of licensing
|
12,111
|
12,711
|
(600)
|
(5)%
|
|
31,980
|
29,628
|
2,352
|
8%
|
Gross margin
|
274,214
|
265,395
|
8,819
|
3%
|
|
785,504
|
722,794
|
62,710
|
9%
|
Gross margin percentage
|
96%
|
95%
|
|
|
|
96%
|
96%
|
|
|
Factor
|
Revenue
|
Gross Margin
|
||
Mobile
|
á
|
Higher adoption of our technologies into more devices
|
ßà
|
No significant fluctuations
|
Broadcast
|
â
|
Lower volume of STBs, partially offset by higher recoveries.
|
||
CE
|
á
|
Higher patent licensing and higher volume of DMAs, partially offset by lower recoveries
|
||
Other
|
á
|
Higher revenues from Dolby Voice and gaming, and an increase in Dolby Cinema locations partially offset by lower recoveries in automotive
|
||
PC
|
á
|
Higher patent licensing and higher volume, partially offset by lower ASP from decreasing number of PCs with optical disc functionality
|
Factor
|
Revenue
|
Gross Margin
|
||
Mobile
|
á
|
Higher adoption of our technologies into more devices, recoveries, and higher patent licensing
|
ßà
|
No significant fluctuations
|
PC
|
â
|
Lower recoveries and lower ASP from decreasing number of PCs with optical disc functionality, partially offset by higher patent licensing
|
||
Broadcast
|
â
|
Lower volume of STBs, partially offset by higher revenues from TVs, patent licensing, and recoveries
|
||
Other
|
á
|
Higher patent licensing, revenue from Dolby Cinema, Via administrative fees, and Dolby Voice, partially offset by lower automotive revenue
|
||
CE
|
á
|
Higher patent licensing and higher volume of DMAs, partially offset by lower recoveries and lower volume of DVDs
|
|
Fiscal Quarter Ended
|
Change
|
|
Fiscal Year-To-Date Ended
|
Change
|
||||
Products
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
Revenue
|
$26,265
|
$22,569
|
$3,696
|
16%
|
|
$73,863
|
$71,493
|
$2,370
|
3%
|
Percentage of total revenue
|
8%
|
7%
|
|
|
|
8%
|
8%
|
|
|
Cost of products
|
17,213
|
14,910
|
2,303
|
15%
|
|
49,851
|
46,618
|
3,233
|
7%
|
Gross margin
|
9,052
|
7,659
|
1,393
|
18%
|
|
24,012
|
24,875
|
(863)
|
(3)%
|
Gross margin percentage
|
34%
|
34%
|
|
|
|
33%
|
35%
|
|
|
Factor
|
Revenue
|
Gross Margin
|
||
Products
|
á
|
Improved mix of Cinema products
|
â
|
Lower utilization of manufacturing capacity, partially offset by improved mix of products
|
Factor
|
Revenue
|
Gross Margin
|
||
Products
|
á
|
Higher units of Cinema and Dolby Voice products
|
â
|
Lower utilization of manufacturing capacity and higher excess & obsolete charges, partially offset by improved mix of products
|
|
Fiscal Quarter Ended
|
Change
|
|
Fiscal Year-To-Date Ended
|
Change
|
||||
Services
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
Revenue
|
$4,857
|
$4,990
|
$(133)
|
(3)%
|
|
$15,252
|
$15,491
|
$(239)
|
(2)%
|
Percentage of total revenue
|
2%
|
2%
|
|
|
|
2%
|
2%
|
|
|
Cost of services
|
5,141
|
4,504
|
637
|
14%
|
|
14,469
|
12,823
|
1,646
|
13%
|
Gross margin
|
(284)
|
486
|
(770)
|
(158)%
|
|
783
|
2,668
|
(1,885)
|
(71)%
|
Gross margin percentage
|
(6)%
|
10%
|
|
|
|
5%
|
17%
|
|
|
Factor
|
Revenue
|
Gross Margin
|
||
Services
|
ßà
|
No significant fluctuations
|
â
|
Lower utilization of available capacity
|
Factor
|
Revenue
|
Gross Margin
|
||
Services
|
ßà
|
No significant fluctuations
|
â
|
Lower utilization of available capacity
|
|
Fiscal Quarter Ended
|
Change
|
|
Fiscal Year-To-Date Ended
|
Change
|
||||
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
Research and development
|
$60,357
|
$59,631
|
$726
|
1%
|
|
$176,294
|
$175,490
|
$804
|
—%
|
Percentage of total revenue
|
19%
|
20%
|
|
|
|
19%
|
21%
|
|
|
Category
|
Key Drivers
|
|
Research & Development
|
ßà
|
No significant fluctuations
|
Category
|
Key Drivers
|
|
Research & Development
|
ßà
|
No significant fluctuations
|
|
Fiscal Quarter Ended
|
Change
|
|
Fiscal Year-To-Date Ended
|
Change
|
||||
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
Sales and marketing
|
$79,834
|
$73,480
|
$6,354
|
9%
|
|
$224,002
|
$220,275
|
$3,727
|
2%
|
Percentage of total revenue
|
25%
|
24%
|
|
|
|
25%
|
26%
|
|
|
Category
|
Key Drivers
|
|
Legal, Professional, & Consulting
|
á
|
Increased IP related activities aimed at revenue generation
|
Marketing Programs
|
á
|
Higher costs related to marketing efforts
|
Facilities
|
á
|
Higher costs associated with our worldwide headquarters
|
Category
|
Key Drivers
|
|
Legal, Professional, & Consulting
|
á
|
Increased IP related activities aimed at revenue generation
|
Stock-Based Compensation
|
â
|
Decrease in award grants
|
|
Fiscal Quarter Ended
|
Change
|
|
Fiscal Year-To-Date Ended
|
Change
|
||||
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
General and administrative
|
$48,081
|
$44,497
|
$3,584
|
8%
|
|
$147,113
|
$129,290
|
$17,823
|
14%
|
Percentage of total revenue
|
15%
|
15%
|
|
|
|
16%
|
15%
|
|
|
Category
|
Key Drivers
|
|
Legal, Professional, & Consulting
|
á
|
Higher costs associated with various legal activities, patent filings, and implementing regulatory changes
|
Stock-Based Compensation
|
á
|
Higher fair value of award grants
|
Facilities
|
á
|
Higher costs associated with our worldwide headquarters
|
Category
|
Key Drivers
|
|
Compensation & Benefits
|
á
|
Higher costs due to employee base mix and merit increases
|
Stock-Based Compensation
|
á
|
Higher fair value of award grants
|
Legal, Professional, & Consulting
|
á
|
Higher costs associated with various legal activities, patent filings, and implementing regulatory changes
|
|
Fiscal Quarter Ended
|
Change
|
|
Fiscal Year-To-Date Ended
|
Change
|
||||
Other Income/Expense
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
|
June 29,
2018 |
June 30,
2017 |
$
|
%
|
Interest income
|
$5,488
|
$2,511
|
$2,977
|
119%
|
|
$13,161
|
$6,511
|
$6,650
|
102%
|
Interest expense
|
(87)
|
(31)
|
(56)
|
181%
|
|
(151)
|
(94)
|
(57)
|
61%
|
Other income/(expense), net
|
(3,603)
|
(2,109)
|
(1,494)
|
71%
|
|
(5,439)
|
(1,546)
|
(3,893)
|
252%
|
Total
|
$1,798
|
$371
|
$1,427
|
385%
|
|
$7,571
|
$4,871
|
$2,700
|
55%
|
Category
|
Key Drivers
|
|
Interest Income
|
á
|
Higher yields on our investment balances
|
Other Income/(Expense)
|
â
|
Increase in other expense primarily due to a non-cash impairment of a cost method equity investment
|
Category
|
Key Drivers
|
|
Interest Income
|
á
|
Higher yields on our investment balances
|
Other Income/(Expense)
|
â
|
Increase in other expense primarily due to a non-cash impairment of a cost method equity investment, and higher foreign currency translation losses
|
|
Fiscal Quarter Ended
|
|
Fiscal Year-To-Date Ended
|
||
|
June 29,
2018 |
June 30,
2017 |
|
June 29,
2018 |
June 30,
2017 |
Provision for income taxes
|
$(13,302)
|
$(20,117)
|
|
$(198,332)
|
$(49,666)
|
Effective tax rate
|
13.8%
|
20.9%
|
|
73.2%
|
21.6%
|
Factor
|
Impact On Effective Tax Rate
|
|
Tax Act
|
â
|
Higher benefit due to the reduction of the federal statutory rate
|
Factor
|
Impact On Effective Tax Rate
|
|
Tax Act
|
á
|
Higher tax provision for deemed repatriation and write-down of deferred tax assets recognized in Q1 fiscal 2018
|
Stock-Based Compensation
|
â
|
Higher benefit related to the settlement of stock-based awards
|
|
June 29,
2018 |
September 29,
2017 |
||||
Cash and cash equivalents
|
$
|
829,621
|
|
$
|
627,017
|
|
Short-term investments
|
195,284
|
|
247,757
|
|
||
Long-term investments
|
243,179
|
|
314,364
|
|
||
Accounts receivable, net
|
149,582
|
|
73,750
|
|
||
Accounts payable and accrued liabilities
|
214,046
|
|
221,407
|
|
||
Working capital
|
998,621
|
|
765,661
|
|
|
Fiscal Year-To-Date Ended
|
|||||
|
June 29,
2018 |
June 30,
2017 |
||||
Net cash provided by operating activities
|
$
|
240,471
|
|
$
|
297,365
|
|
Factor
|
Impact On Cash Flows
|
|
Income Taxes, Net
|
á
|
Higher long term tax liabilities due to impact of the Tax Act
|
Net Income
|
â
|
Net loss in Q1 fiscal 2018 due to impact of the Tax Act
|
Working Capital
|
â
|
Lower inflows due to increase in accounts receivable and decrease in accrued liabilities
|
|
Fiscal Year-To-Date Ended
|
|||||
|
June 29,
2018 |
June 30,
2017 |
||||
Net cash provided by (used in) investing activities
|
$
|
40,077
|
|
$
|
(131,129
|
)
|
Capital expenditures
|
(54,869
|
)
|
(81,668
|
)
|
Factor
|
Impact On Cash Flows
|
|
Proceeds From Investments
|
á
|
Higher inflows from the sale & maturity of marketable investment securities
|
Purchase Of Investments
|
á
|
Lower outflows for the purchase of marketable investment securities
|
Capital Expenditures
|
á
|
Lower expenditures for PP&E
|
|
Fiscal Year-To-Date Ended
|
|||||
|
June 29,
2018 |
June 30,
2017 |
||||
Net cash used in financing activities
|
$
|
(76,346
|
)
|
$
|
(88,966
|
)
|
Repurchase of common stock
|
(90,480
|
)
|
(74,994
|
)
|
Factor
|
Impact On Cash Flows
|
|
Common Stock Issuance
|
á
|
Higher cash inflows from increased employee stock option exercises and shares issued under our ESPP
|
Share Repurchases
|
â
|
Higher outflows from increases in common stock repurchases
|
•
|
Australian Dollar
|
•
|
British Pound
|
•
|
Chinese Yuan
|
•
|
Euro
|
•
|
Indian Rupee
|
•
|
Japanese Yen
|
•
|
Korean Won
|
•
|
Polish Zloty
|
•
|
Russian Ruble
|
•
|
Singapore Dollar
|
•
|
Swedish Krona
|
•
|
Taiwan Dollar
|
•
|
United Arab Emirates Dirham
|
•
|
Purchasing trends away from traditional PCs and toward computing devices without optical disc drives, such as mobile devices, which are 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;
|
•
|
Leading companies in the audio and video conferencing markets; 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.;
|
•
|
U.S. government trade restrictions, including those which may impose restrictions, including prohibitions, on the exportation, reexportation, sale, shipment or other transfer of programming, technology, components, and/or services to foreign persons;
|
•
|
Changes in diplomatic and trade relationships, including new tariffs, trade protection measures, import or export licensing requirements, trade embargoes and other trade barriers;
|
•
|
Tariffs imposed by the U.S. on goods from other countries and tariffs imposed by other countries on U.S. goods, including the tariffs imposed in July 2018 by the U.S. government on various imports from China and by the Chinese government on certain U.S. goods, the scope and duration of which remain uncertain;
|
•
|
Compliance with applicable international laws and regulations, including antitrust and other competition 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.;
|
•
|
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 the European Union's General Data Protection Regulation and 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.
|
•
|
Changes in geographic mix of earnings, where earnings are lower than anticipated in countries with lower tax rates and higher than anticipated in countries with higher tax rates;
|
•
|
Changes in the valuation of our deferred tax assets and liabilities;
|
•
|
Changes in transfer pricing arrangements;
|
•
|
Outcomes of tax audits;
|
•
|
Changes in accounting principles; or
|
•
|
Changes in tax laws and regulations in the countries in which we operate, including an increase in tax rates, or an adverse change in the treatment of an item of income or expense.
|
Repurchase Activity
|
Total Shares Repurchased
|
Average Price
Paid Per Share (1) |
Total Shares Purchased As Part Of Publicly Announced Programs
|
Remaining Authorized Share Repurchases
(2)
|
March 31, 2018 - April 27, 2018
|
38,097
|
$60.35
|
38,097
|
$114.7 million
|
April 28, 2018 - May 25, 2018
|
701,114
|
61.83
|
701,114
|
$71.3 million
|
May 26, 2018 - June 29, 2018
|
157,478
|
62.40
|
157,478
|
$61.5 million
|
Total
|
896,689
|
|
896,689
|
|
(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.
|
Exhibit
Number
|
|
Description
|
|
Incorporated By Reference Herein
|
|
|
||||
|
Form
|
|
File Number
|
|
Date
|
|
Provided Herewith
|
|||
10.1*
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
X
|
|
31.2
|
|
|
|
|
|
|
|
|
X
|
|
32.1
+
|
|
|
|
|
|
|
|
|
X
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Extension Definition
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
X
|
DOLBY LABORATORIES, INC.
|
|
By:
|
/
S
/ LEWIS CHEW
|
|
Lewis Chew
|
|
Executive Vice President and Chief Financial Officer
|
|
(Principal Financial and Accounting Officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Dolby Laboratories, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer 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 Quarterly Report on Form 10-Q of Dolby Laboratories, Inc.;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/s/ LEWIS CHEW
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Lewis Chew
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Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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•
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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•
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The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ KEVIN J. YEAMAN
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Kevin J. Yeaman
President and Chief Executive Officer
(Principal Executive Officer)
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/s/ LEWIS CHEW
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Lewis Chew
Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
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