Dolby Laboratories(DLB)

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Dolby Laboratories(DLB) - 2024 Q4 - Annual Report
2024-11-19 22:07
Part I [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Dolby Laboratories specializes in advancing audio and video entertainment, primarily through licensing technologies (93% of FY2024 revenue) to consumer electronics manufacturers - Dolby's business model is centered on inventing and innovating technology to improve audio and video entertainment experiences, with a strong focus on licensing to content creators, distributors, and consumer electronics manufacturers[21](index=21&type=chunk) Revenue Composition (FY2022-FY2024) | Revenue Source | FY 2024 | FY 2023 | FY 2022 | | :--------------------- | :------ | :------ | :------ | | Licensing | 93% | 92% | 93% | | Products and services | 7% | 8% | 7% | | **Total** | **100%**| **100%**| **100%**| [Licensing](index=7&type=section&id=Licensing) Dolby's licensing business, comprising over 90% of revenue, focuses on branded technologies and standard-essential patents, utilizing various royalty and fixed-fee models - The licensing business is composed of two primary components: Branded Technologies (including Branded Audio Codecs, Dolby Atmos & Dolby Vision) and Patents (including Audio and Imaging Patents)[29](index=29&type=chunk) - Branded technologies like DD+, Dolby AC-4, Dolby Atmos, and Dolby Vision are licensed to approximately **1,000 electronics manufacturers**, creating a virtuous cycle where more content drives more device adoption and vice versa[29](index=29&type=chunk)[32](index=32&type=chunk)[39](index=39&type=chunk) - Patent licensing revenue is mainly from standard-essential patents for codecs like AAC, AVC, and HEVC, primarily through patent pools such as Access Advance and Via LA[47](index=47&type=chunk)[51](index=51&type=chunk)[54](index=54&type=chunk) - Revenue models for licensing include per-unit royalties, minimum volume commitments, fixed-fee contracts, and recoveries for prior period under-reporting, leading to potential revenue variability[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) [Products & Services](index=11&type=section&id=Products%20%26%20Services) Dolby provides hardware and software solutions for cinema, broadcast, and live entertainment, including digital cinema products and professional services - The company designs and manufactures audio and imaging hardware and software for cinema and other entertainment industries, including digital cinema servers, processors, amplifiers, and loudspeakers[62](index=62&type=chunk)[63](index=63&type=chunk) - Services offered include equipment training, maintenance, mixing room alignment, and calibration for theatrical and television production[64](index=64&type=chunk) [Dolby.io](index=12&type=section&id=Dolby.io) Dolby.io is a SaaS platform for high-quality, low-latency interactive live events, shifting the company to a direct-to-enterprise, consumption-based revenue model - Dolby.io is a SaaS platform offering high-quality, low-latency streaming solutions for interactive live events[68](index=68&type=chunk) - The platform operates on a consumption-based revenue model, sold directly to enterprises, which is a departure from the company's traditional device-centric licensing business[69](index=69&type=chunk) [End Markets](index=12&type=section&id=End%20Markets) In FY2024, 93% of Dolby's revenue derived from licensing across end markets, with Broadcast (35%) and Mobile (20%) as largest contributors Licensing Revenue by End Market (FY2022-FY2024) | Market | FY 2024 | FY 2023 | FY 2022 | Main Components | | :-------- | :------ | :------ | :------ | :----------------------------------------------------------------------------- | | Broadcast | 35% | 38% | 37% | Televisions and STBs | | Mobile | 20% | 20% | 21% | Smartphones and Tablets | | CE | 14% | 14% | 16% | DMAs, Blu-ray Disc devices, AVRs, Soundbars, and DVDs | | PC | 12% | 10% | 13% | Windows and macOS operating systems and devices | | Other | 19% | 18% | 13% | Dolby Cinema, Gaming consoles, Automotive, and Patent pool administrative fees | | **Total** | **100%**| **100%**| **100%**| | [Intellectual Property](index=12&type=section&id=Intellectual%20Property) Dolby's business relies on a robust IP portfolio of **27,400 issued patents** and **5,900 pending applications**, actively enforced against unauthorized use - As of September 27, 2024, Dolby held approximately **27,400 issued patents** and had **5,900 pending patent applications** globally, with expirations extending through December 2047[74](index=74&type=chunk)[75](index=75&type=chunk) - While some patents for Dolby Digital (DD) technologies have expired, leading to a decline in related revenue, the company has successfully transitioned many licensees to the newer DD+ technologies[76](index=76&type=chunk) - The company actively enforces its IP rights to address issues of underreporting and unauthorized use of its technologies by OEMs[79](index=79&type=chunk) [Human Capital](index=14&type=section&id=Human%20Capital) As of September 27, 2024, Dolby employed **2,080 people** globally, offering competitive compensation and benefits under Board oversight - As of September 27, 2024, Dolby had **2,080 employees** worldwide, none of whom are subject to a collective bargaining agreement[91](index=91&type=chunk) - The company offers competitive compensation and benefits packages, including salary, incentive bonuses, equity, and an Employee Stock Purchase Plan (ESPP)[92](index=92&type=chunk) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) Dolby faces significant risks including market volatility, IP protection challenges, operational dependencies, intense competition, regulatory compliance, and the influence of its dual-class stock structure - **Revenue Generation:** Risks include changing content trends like 'cord-cutting' affecting STB demand, concentration and competition in the mobile market, reliance on key partnerships in the PC market, and the success of Dolby Cinema being tied to external factors like movie production and box office performance[100](index=100&type=chunk)[101](index=101&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk) - **Intellectual Property:** The business is dependent on protecting its IP. Risks include the expiration of patents (specifically for older DD technologies), unauthorized use of IP, potential litigation, and challenges in enforcing IP rights in foreign jurisdictions[132](index=132&type=chunk)[134](index=134&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) - **Operations & Cybersecurity:** The company relies on sole-source suppliers for certain components. It faces significant threats to its information systems from cyber attacks, which could lead to data breaches, business disruption, and financial loss. Compliance with evolving data privacy regulations like CPRA is also a key risk[145](index=145&type=chunk)[148](index=148&type=chunk)[153](index=153&type=chunk) - **Competition:** The company faces aggressive competition and pricing pressure across all markets. Competitors may offer integrated systems at lower prices or for free, and disruptive technologies like AI/ML could alter the market[85](index=85&type=chunk)[154](index=154&type=chunk)[157](index=157&type=chunk) - **Legal & Regulatory:** A substantial portion of revenue is international, exposing the company to risks from trade restrictions, sanctions, and complex foreign laws. Changes in tax laws, such as the OECD's Pillar 2 minimum tax, could also impact financial results[167](index=167&type=chunk)[178](index=178&type=chunk)[180](index=180&type=chunk) - **Stock-Related Issues:** The Dolby family controls a majority of the voting power (**85.6%** as of Sept 27, 2024) through a dual-class stock structure, giving them significant influence over corporate decisions[182](index=182&type=chunk)[184](index=184&type=chunk) [Item 1C. Cybersecurity](index=35&type=section&id=Item%201C.%20Cybersecurity) Dolby's cybersecurity strategy, overseen by the CISO and Audit Committee, achieved ISO 27001 certification in 2024, with no material incidents reported to date - The company's cybersecurity risk management strategy is based on monitoring threats, adapting capabilities, and aligning practices with business goals, including processes for identifying, assessing, and managing risks[197](index=197&type=chunk)[198](index=198&type=chunk) - In 2024, Dolby received **ISO 27001 certification** for its cybersecurity function and for streaming media through Dolby Millicast[199](index=199&type=chunk) - The Board of Directors, through its Audit Committee, oversees cybersecurity risk, with the Chief Information Security Officer (CISO) managing these risks and providing quarterly briefings[203](index=203&type=chunk)[204](index=204&type=chunk)[207](index=207&type=chunk) - The company has not encountered any cybersecurity incident that had a material impact on its operations or financial standing[202](index=202&type=chunk) [Item 2. Properties](index=36&type=section&id=Item%202.%20Properties) Dolby owns headquarters in San Francisco and Sunnyvale, leases global facilities, and has related-party leases with Dolby family entities, with one San Francisco lease expiring in October 2024 - The company owns its headquarters at 1275 Market Street, San Francisco, and a commercial building in Sunnyvale, California[209](index=209&type=chunk)[210](index=210&type=chunk) - Dolby has related-party lease agreements with entities affiliated with the Dolby family for properties in Burbank, CA and Wootton Bassett, England, holding minority ownership interests in these real estate entities[211](index=211&type=chunk) - The lease for the 100 Potrero Avenue office in San Francisco, leased from Dolby family trusts, expired on October 31, 2024, and the company has ceased occupancy[212](index=212&type=chunk)[213](index=213&type=chunk) [Item 3. Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) Dolby is involved in various legal proceedings, primarily IP-related, which management expects will not materially impact financial results, though specific outcomes could be material - The company is involved in various legal proceedings in the normal course of business, with management not expecting a material adverse impact on financial results, but acknowledging litigation's unpredictable nature[216](index=216&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Dolby's Class A common stock trades on NYSE, supported by a quarterly **$0.33 per share** dividend and an active **$3.3 billion** stock repurchase program - The company maintains a quarterly cash dividend program, with the most recent dividend announced on November 19, 2024, at **$0.33 per share**[221](index=221&type=chunk) - A stock repurchase program has been in place since November 2009, with total Board authorizations reaching **$3.3 billion** as of August 2024[224](index=224&type=chunk)[225](index=225&type=chunk) Share Repurchase Activity (Q4 FY2024) | Period | Total Shares Purchased | Average Price Paid Per Share | Remaining Authorized Repurchases | | :--------------------------------- | :--------------------- | :--------------------------- | :------------------------------- | | June 29, 2024 - July 26, 2024 | 250,757 | $79.76 | $51.6 million | | July 27, 2024 - August 23, 2024 | — | — | $401.6 million | | August 24, 2024 - September 27, 2024 | — | — | $401.6 million | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2024, Dolby's total revenue decreased to **$1.27 billion**, driven by lower licensing and product revenue, while operating income increased to **$258.3 million** due to reduced restructuring charges [Results of Operations](index=46&type=section&id=Results%20of%20Operations) FY2024 total revenue decreased **2%** to **$1.27 billion**, with licensing down **1%**, while operating income increased **20%** to **$258.3 million** due to lower expenses and a **15%** effective tax rate Licensing Revenue by Market (FY2024 vs FY2023) | Market | FY 2024 ($M) | FY 2023 ($M) | | :-------------------- | :----------- | :----------- | | Broadcast | 409.1 | 451.7 | | Mobile | 235.8 | 243.9 | | CE | 165.8 | 170.2 | | PC | 141.3 | 124.4 | | Other | 229.8 | 207.8 | | **Total Licensing** | **1,181.8** | **1,197.9** | - Licensing revenue decreased by **1%** (**$16.1 million**) in FY2024, primarily due to lower revenue from the Broadcast market because of the timing of minimum volume commitments and lower recoveries[281](index=281&type=chunk)[283](index=283&type=chunk) - Products and services revenue decreased by **10%** (**$9.9 million**) due to lower cinema products revenue, while gross margin for this segment increased from **14% to 20%** due to a higher inventory reserve provision in the prior year[286](index=286&type=chunk) - Restructuring charges decreased by **$40.7 million** (**86%**) in FY2024 compared to FY2023, significantly boosting operating income[294](index=294&type=chunk) - The effective tax rate for FY2024 was **15%**, down from **19%** in FY2023, mainly due to a tax benefit related to the Transition Tax liability under the Tax Cuts and Jobs Act of 2017[302](index=302&type=chunk)[540](index=540&type=chunk) [Liquidity, Capital Resources, and Financial Condition](index=50&type=section&id=Liquidity%2C%20Capital%20Resources%2C%20and%20Financial%20Condition) As of September 27, 2024, Dolby's liquidity was **$482.0 million** in cash, significantly impacted by the **$443.6 million** GE Licensing acquisition, with **$327.3 million** cash from operations Selected Financial Information (as of Fiscal Year End) | Item | Sept 27, 2024 ($M) | Sept 29, 2023 ($M) | | :---------------------------- | :----------------- | :----------------- | | Cash and cash equivalents | 482.0 | 745.4 | | Short-term investments | 0.0 | 139.1 | | Working capital | 776.6 | 1,065.6 | - In fiscal 2024, the company acquired GE Licensing for a cash purchase price of **$443.6 million**, significantly reducing cash and investment balances[307](index=307&type=chunk) Cash Flow Summary (FY2024 vs FY2023) | Activity | FY 2024 ($M) | FY 2023 ($M) | | :------------------- | :----------- | :----------- | | Net Cash from Ops | 327.3 | 367.1 | | Net Cash from/(used in) Inv | (286.3) | 54.2 | | Net Cash used in Fin | (287.8) | (236.8) | - Net cash used in investing activities was **$286.3 million**, driven by business combinations, a sharp contrast to the **$54.2 million** provided by investing activities in the prior year[315](index=315&type=chunk) - The company has significant future commitments, including **$79.4 million** for naming rights (e.g., Dolby Theatre) and **$16.3 million** in purchase obligations[319](index=319&type=chunk)[321](index=321&type=chunk)[554](index=554&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Dolby faces market risks from interest rate and foreign currency fluctuations, mitigating the latter with **$111.7 million** in forward contracts to hedge international operating expenses - The company's investment portfolio is subject to interest rate fluctuations, but the policy is conservative, focusing on capital preservation and high-rated securities[327](index=327&type=chunk) - Dolby faces foreign currency risk as most international revenue is in USD, while foreign operating expenses are in local currencies, exposing operating margins to exchange rate movements[328](index=328&type=chunk) - The company uses foreign currency forward contracts to hedge against currency volatility, with a total notional amount of **$111.7 million** as of September 27, 2024[329](index=329&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk) [Item 8. Consolidated Financial Statements](index=56&type=section&id=Item%208.%20Consolidated%20Financial%20Statements) This section presents Dolby's consolidated financial statements, including KPMG's unqualified audit opinion, showing **$3.11 billion** in total assets and **$261.8 million** net income for FY2024 [Report of Independent Registered Public Accounting Firm](index=57&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on Dolby's consolidated financial statements and internal controls, identifying revenue estimate assessment as a Critical Audit Matter - KPMG LLP provided an unqualified audit opinion on both the consolidated financial statements and the effectiveness of internal control over financial reporting[343](index=343&type=chunk) - The audit identified a Critical Audit Matter related to the 'Assessment of revenue estimate related to sales-based licensing arrangements' due to challenging and subjective judgments involved in the estimation process[352](index=352&type=chunk)[353](index=353&type=chunk) [Consolidated Financial Statements](index=60&type=section&id=Consolidated%20Financial%20Statements) Dolby's consolidated financial statements show **$3.11 billion** in total assets, **$1.27 billion** in total revenue, and **$261.8 million** net income for FY2024 Consolidated Balance Sheet Highlights (FY2024 vs FY2023) | Account | Sept 27, 2024 ($M) | Sept 29, 2023 ($M) | | :------------------------------------ | :----------------- | :----------------- | | Total Assets | 3,109.9 | 2,979.8 | | Cash and cash equivalents | 482.0 | 745.4 | | Goodwill | 533.2 | 408.4 | | Total Liabilities | 623.0 | 607.6 | | Total Stockholders' Equity | 2,486.9 | 2,372.2 | Consolidated Statement of Operations Highlights (FY2024 vs FY2023) | Account | FY 2024 ($M) | FY 2023 ($M) | FY 2022 ($M) | | :--------------------------- | :----------- | :----------- | :----------- | | Total Revenue | 1,273.7 | 1,299.7 | 1,253.8 | | Gross Margin | 1,133.2 | 1,147.2 | 1,112.4 | | Operating Income | 258.3 | 215.8 | 206.6 | | Net Income (attributable to Dolby) | 261.8 | 200.7 | 184.1 | | Diluted EPS | $2.69 | $2.05 | $1.81 | [Notes to Consolidated Financial Statements](index=66&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, including revenue recognition estimates, **$432.9 million** GE Licensing acquisition, **$58.7 million** THEO acquisition, stock repurchases, and a reduced **15.4%** effective tax rate - **Revenue Recognition (Note 3):** A significant portion of licensing revenue is estimated based on licensee sales data, reported a quarter in arrears, involving judgment and potential subsequent adjustments[273](index=273&type=chunk)[436](index=436&type=chunk) - **Business Combinations (Note 15):** In FY2024, Dolby acquired GE Licensing for **$432.9 million** (net consideration), adding **$80.8 million** in goodwill and **$274.2 million** in intangible assets, and THEO Technologies for **$58.7 million**, adding **$39.9 million** in goodwill[560](index=560&type=chunk)[561](index=561&type=chunk)[566](index=566&type=chunk)[570](index=570&type=chunk) - **Stockholders' Equity (Note 9):** The company repurchased **1.94 million shares** for **$160.0 million** in FY2024 and declared dividends totaling **$1.23 per share** during the fiscal year[522](index=522&type=chunk)[523](index=523&type=chunk) - **Restructuring (Note 13):** The company initiated restructuring plans in April 2024 and September 2023, incurring total charges of **$6.4 million** in FY2024, a significant decrease from **$47.1 million** in FY2023[549](index=549&type=chunk)[551](index=551&type=chunk)[553](index=553&type=chunk) - **Income Taxes (Note 12):** The effective tax rate decreased to **15.4%** in FY2024 from **19.4%** in FY2023, primarily due to a **$10.0 million** benefit related to a U.S. Tax Court opinion on the 2017 Tax Act's Transition Tax[540](index=540&type=chunk) [Item 9A. Controls and Procedures](index=103&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and KPMG concluded that Dolby's disclosure controls and internal control over financial reporting were effective as of September 27, 2024, with no material changes reported - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the fiscal year-end[598](index=598&type=chunk) - Management assessed internal control over financial reporting based on the COSO framework and concluded it was effective as of September 27, 2024, an assessment audited and confirmed by KPMG LLP[601](index=601&type=chunk) [Item 9B. Other Information](index=103&type=section&id=Item%209B.%20Other%20Information) On August 21, 2024, SVP John Couling adopted a Rule 10b5-1 trading plan for the potential sale of up to **57,000 shares** of Class A common stock - On August 21, 2024, John Couling, SVP, Entertainment, adopted a Rule 10b5-1 trading plan for the sale of up to **57,000 shares** of Class A common stock[604](index=604&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=105&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement[609](index=609&type=chunk) [Item 11. Executive Compensation](index=105&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the 2025 Proxy Statement - Information regarding executive compensation is incorporated by reference from the 2025 Proxy Statement[611](index=611&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=105&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership by beneficial owners and management, and equity compensation plans, is incorporated by reference from the 2025 Proxy Statement - Information regarding security ownership and equity compensation plans is incorporated by reference from the 2025 Proxy Statement[612](index=612&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=105&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2025 Proxy Statement - Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the 2025 Proxy Statement[612](index=612&type=chunk) [Item 14. Principal Accounting Fees and Services](index=105&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the 2025 Proxy Statement - Information regarding principal accounting fees and services is incorporated by reference from the 2025 Proxy Statement[613](index=613&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=106&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides an index of exhibits filed with the report, noting that financial statement schedules are omitted as information is in Item 8 - This section provides an index of all exhibits filed with or incorporated by reference into the Form 10-K[616](index=616&type=chunk)[619](index=619&type=chunk)
Dolby Laboratories(DLB) - 2024 Q4 - Annual Results
2024-11-19 21:19
[Credit Agreement Introduction](index=5&type=section&id=Credit%20Agreement%20Introduction) This Credit Agreement, dated November 14, 2024, is between Dolby Laboratories, Inc. as Borrower, its subsidiaries as Guarantors, and Bank of America, N.A. as Lender - This Credit Agreement is dated November 14, 2024, among Dolby Laboratories, Inc. as the Borrower, certain of its subsidiaries as Guarantors, and Bank of America, N.A. as the Lender[8](index=8&type=chunk) - The Borrower has requested, and the Lender has agreed to provide, loans and other financial accommodations based on the terms and conditions outlined in this agreement[10](index=10&type=chunk) [ARTICLE I: DEFINITIONS AND ACCOUNTING TERMS](index=5&type=section&id=ARTICLE%20I%20DEFINITIONS%20AND%20ACCOUNTING%20TERMS) This article defines all capitalized terms, establishes financial thresholds, and sets rules for accounting principles and interpretation [Defined Terms](index=5&type=section&id=1.01%20Defined%20Terms) This section defines all capitalized terms, including key financial thresholds and interest rate structures, for consistent agreement interpretation Key Financial Terms | Term | Definition/Amount | | :--- | :--- | | **Commitment** | $250,000,000 | | **Closing Date** | November 14, 2024 | | **Maturity Date** | November 14, 2029 | | **Threshold Amount** | $75,000,000 | Applicable Rate Structure | Level | Consolidated Leverage Ratio | Term SOFR | Base Rate | Commitment Fee | | :--- | :--- | :--- | :--- | :--- | | 1 | < 1.00 to 1.00 | 0.900% | 0.000% | 0.150% | | 2 | > 1.00 to 1.00 but < 1.75 to 1.00 | 1.150% | 0.150% | 0.175% | | 3 | > 1.75 to 1.00 but < 2.50 to 1.00 | 1.275% | 0.275% | 0.200% | | 4 | > 2.50 to 1.00 | 1.500% | 0.500% | 0.250% | - The initial Applicable Rate is set at **Level 1** until the first Compliance Certificate is delivered for the fiscal quarter ending December 27, 2024; otherwise, **Level 4** applies[17](index=17&type=chunk) [Other Interpretive Provisions](index=27&type=section&id=1.02%20Other%20Interpretive%20Provisions) This section outlines rules for interpreting agreement language, including references to amended documents and the non-substantive nature of headings - References to any agreement, instrument, or law are construed as referring to such items as they may be amended, supplemented, or modified over time, subject to Loan Document restrictions[179](index=179&type=chunk) [Accounting Terms](index=28&type=section&id=1.03%20Accounting%20Terms) This section mandates GAAP compliance for financial terms and data, provides for ratio amendments due to GAAP changes, and outlines pro forma calculations - Financial calculations will continue to treat operating leases as they were prior to ASU 842 implementation, regardless of new GAAP capitalization requirements[181](index=181&type=chunk) - If a change in GAAP affects financial ratio computations, the Borrower and Lender will negotiate in good faith to amend the ratio to preserve its original intent[181](index=181&type=chunk) [ARTICLE II: COMMITMENT AND BORROWINGS](index=29&type=section&id=ARTICLE%20II%20COMMITMENT%20AND%20BORROWINGS) This article details the Lender's commitment, procedures for borrowing, repayment, and termination of the credit facility [Loans](index=29&type=section&id=2.01%20Loans) This section establishes the Lender's commitment to provide loans up to the specified Facility amount, allowing the Borrower to borrow, prepay, and reborrow funds - The Lender agrees to make loans up to a total outstanding amount of the **Commitment ($250,000,000)** during the Availability Period[37](index=37&type=chunk)[189](index=189&type=chunk) [Borrowings, Conversions and Continuations of Loans; Increases in Facility](index=30&type=section&id=2.02%20Borrowings%2C%20Conversions%20and%20Continuations%20of%20Loans%3B%20Increases%20in%20Facility) This section details procedures for new borrowings, loan conversions, continuations, and the process for increasing the total facility amount - The Borrower may request to increase the Facility by an aggregate amount not to exceed the Incremental Amount of **$150,000,000**, subject to Lender's sole discretion and other conditions[95](index=95&type=chunk)[193](index=193&type=chunk) - Specific notice periods are required for borrowings: not later than 11:00 a.m. two Business Days prior for Term SOFR Loans and on the requested date for Base Rate Loans[191](index=191&type=chunk) [Prepayments](index=32&type=section&id=2.03%20Prepayments) This section covers both optional and mandatory prepayments of loans, requiring immediate prepayment if total outstanding loans exceed the committed facility amount - The Borrower is required to immediately prepay loans if the Total Outstandings exceed the Facility amount at any time[194](index=194&type=chunk) [Termination or Reduction of Commitment](index=32&type=section&id=2.04%20Termination%20or%20Reduction%20of%20Commitment) This section describes the Borrower's right to voluntarily terminate or permanently reduce the credit facility, which automatically terminates on the Maturity Date - The Borrower may permanently reduce the Facility in minimum increments of **$10,000,000** with at least three Business Days' notice[195](index=195&type=chunk) - The Facility will automatically terminate on the **Maturity Date, November 14, 2029**[115](index=115&type=chunk)[197](index=197&type=chunk) [Repayment of Loans](index=33&type=section&id=2.05%20Repayment%20of%20Loans) This section stipulates that the Borrower must repay the entire aggregate principal amount of all outstanding loans to the Lender on the Maturity Date - The Borrower is required to repay the aggregate principal of all outstanding Loans on the Maturity Date[198](index=198&type=chunk) [Interest and Default Rate](index=33&type=section&id=2.06%20Interest%20and%20Default%20Rate) This section defines interest calculation for loans and specifies a higher Default Rate for all outstanding obligations upon a Specified Event of Default - If a Specified Event of Default occurs, all outstanding obligations will accrue interest at the Default Rate, which is **2% per annum** higher than the otherwise applicable rate[55](index=55&type=chunk)[199](index=199&type=chunk) [Fees](index=33&type=section&id=2.07%20Fees) This section outlines the fees payable by the Borrower, primarily the Commitment Fee, calculated on the daily unused portion of the credit facility - A Commitment Fee is payable quarterly on the daily unused amount of the Facility, calculated using the Commitment Fee rate from the 'Applicable Rate' definition[200](index=200&type=chunk) [ARTICLE III: TAXES, YIELD PROTECTION AND ILLEGALITY](index=35&type=section&id=ARTICLE%20III%20TAXES%2C%20YIELD%20PROTECTION%20AND%20ILLEGALITY) This article addresses tax obligations, legal changes affecting loan terms, and mechanisms for determining interest rates [Taxes](index=35&type=section&id=3.01%20Taxes) This section requires the Borrower to make all payments free of foreign tax deductions and to pay additional amounts if withholding is legally required [Illegality](index=35&type=section&id=3.02%20Illegality) This section addresses situations where changes in law make certain loan types illegal, leading to suspension of obligations or conversion to permissible loan types [Inability to Determine Rates; Successor Rates](index=36&type=section&id=3.03%20Inability%20to%20Determine%20Rates%3B%20Successor%20Rates) This section outlines procedures if the Term SOFR rate cannot be determined, providing for suspension of Term SOFR loans and implementation of a Successor Rate [Increased Costs](index=37&type=section&id=3.04%20Increased%20Costs) This section protects the Lender from financial detriment due to changes in law or regulations, requiring the Borrower to compensate for increased costs [ARTICLE IV: CONDITIONS PRECEDENT TO BORROWINGS](index=39&type=section&id=ARTICLE%20IV%20CONDITIONS%20PRECEDENT%20TO%20BORROWINGS) This article specifies the conditions that must be met for the credit agreement to become effective and for all subsequent borrowings [Conditions to Effectiveness](index=39&type=section&id=4.01%20Conditions%20to%20Effectiveness) This section lists the conditions that must be satisfied before the credit agreement becomes effective, including executed documents, legal opinions, and no material adverse effect - Effectiveness is contingent upon the Lender receiving executed Loan Documents, necessary corporate authorizations, satisfactory legal opinions, and officer's certificates[221](index=221&type=chunk)[223](index=223&type=chunk) - A key condition is that no Material Adverse Effect has occurred since **September 29, 2023**[223](index=223&type=chunk) [Conditions to all Borrowings](index=41&type=section&id=4.02%20Conditions%20to%20all%20Borrowings) This section outlines the ongoing conditions required for any borrowing, ensuring representations and warranties remain true and no default exists - Each borrowing is conditional upon the representations and warranties being true and correct in all material respects at the time of the borrowing[225](index=225&type=chunk) - No Default or Event of Default may exist at the time of a proposed borrowing or would result from it[225](index=225&type=chunk) [ARTICLE V: REPRESENTATIONS AND WARRANTIES](index=41&type=section&id=ARTICLE%20V%20REPRESENTATIONS%20AND%20WARRANTIES) This article contains the Loan Parties' assurances regarding their legal status, financial condition, operations, and compliance with various laws [Corporate Status and Authority](index=41&type=section&id=5.01%20-%205.04) These sections contain the Loan Parties' representations regarding their legal status, corporate power, and the binding nature of the agreement [Financial Condition and Operations](index=42&type=section&id=5.05%20-%205.08) These sections represent the financial health and operational status of the Loan Parties, warranting accurate financial statements and absence of material adverse effects [Compliance and Legal Matters](index=44&type=section&id=5.09%20-%205.17) This group of sections covers representations on various compliance topics, including environmental laws, insurance, taxes, ERISA, and anti-corruption laws [ARTICLE VI: AFFIRMATIVE COVENANTS](index=48&type=section&id=ARTICLE%20VI%20AFFIRMATIVE%20COVENANTS) This article outlines the ongoing obligations of the Borrower and Loan Parties, including financial reporting, notices, and operational compliance [Financial Statements](index=48&type=section&id=6.01%20Financial%20Statements) This section obligates the Borrower to provide the Lender with regular financial reports, including audited annual and unaudited quarterly statements Financial Reporting Deadlines | Report | Deadline | | :--- | :--- | | Audited Annual Financials | Within 90 days after fiscal year-end | | Unaudited Quarterly Financials | Within 45 days after each of the first three fiscal quarter-ends | [Certificates; Other Information](index=49&type=section&id=6.02%20Certificates%3B%20Other%20Information) This section requires the Borrower to deliver a Compliance Certificate and other information, such as SEC filings and 'know your customer' documentation [Notices](index=50&type=section&id=6.03%20Notices) The Borrower is required to promptly notify the Lender of significant events, including any Default, Material Adverse Effect, or material ERISA Event [Operational and Corporate Covenants](index=50&type=section&id=6.04%20-%206.11) This group of covenants requires the Loan Parties to maintain standard business practices, including tax payments, legal existence, and proper use of loan proceeds - The proceeds from borrowings are to be used for general corporate purposes and must not contravene any law or loan document[279](index=279&type=chunk) [Covenant to Guarantee Obligations](index=52&type=section&id=6.12%20Covenant%20to%20Guarantee%20Obligations) This section mandates that new Significant Subsidiaries (not Excluded Subsidiaries) must become Guarantors by executing a Joinder Agreement within 60 days [ARTICLE VII: NEGATIVE COVENANTS](index=53&type=section&id=ARTICLE%20VII%20NEGATIVE%20COVENANTS) This article imposes restrictions on the Loan Parties, limiting their ability to incur liens, additional debt, or undergo fundamental corporate changes [Liens](index=53&type=section&id=7.01%20Liens) This covenant generally prohibits the Loan Parties from creating or allowing any Liens on their property or assets, with a detailed list of Permitted Liens [Indebtedness](index=55&type=section&id=7.02%20Indebtedness) This section restricts the ability of the Loan Parties to incur additional debt, providing a list of permitted indebtedness including certain unsecured and Priority Indebtedness - The company is permitted to incur Priority Indebtedness up to the greater of **10% of Consolidated Net Tangible Assets** or **$150,000,000**[292](index=292&type=chunk) [Fundamental Changes](index=57&type=section&id=7.03%20Fundamental%20Changes) This covenant limits major corporate changes, generally prohibiting mergers, dissolutions, or the sale of substantially all assets, with specific exceptions [Financial Covenant](index=59&type=section&id=7.07%20Financial%20Covenant) This section establishes the primary financial performance metric, requiring the Consolidated Leverage Ratio not to exceed a specific threshold at each fiscal quarter-end Financial Covenant Requirement | Covenant | Requirement | | :--- | :--- | | **Consolidated Leverage Ratio** | Must not be greater than 3.00 to 1.00 | [Sanctions & Anti-Corruption Laws](index=59&type=section&id=7.08%20Sanctions%20%26%207.09%20Anti-Corruption%20Laws) These covenants prohibit the use of loan proceeds for any activities that would violate sanctions administered by authorities like OFAC or breach anti-corruption laws [ARTICLE VIII: EVENTS OF DEFAULT AND REMEDIES](index=59&type=section&id=ARTICLE%20VIII%20EVENTS%20OF%20DEFAULT%20AND%20REMEDIES) This article defines specific events that constitute a default and outlines the Lender's remedies, including termination of commitment and loan acceleration [Events of Default](index=59&type=section&id=8.01%20Events%20of%20Default) This section defines specific events constituting a default, including payment failures, covenant violations, cross-defaults, insolvency, and change of control - An Event of Default includes failure to pay principal or interest, breach of covenants, incorrect representations, and insolvency[304](index=304&type=chunk) - A cross-default on other indebtedness is triggered if the amount exceeds the **Threshold Amount of $75,000,000**[171](index=171&type=chunk)[306](index=306&type=chunk) - A Change of Control, as defined in Article I, constitutes an Event of Default[308](index=308&type=chunk) [Remedies upon Event of Default](index=61&type=section&id=8.02%20Remedies%20upon%20Event%20of%20Default) Upon an Event of Default, this section grants the Lender the right to terminate commitments and declare all outstanding loans and amounts immediately due [ARTICLE IX: CONTINUING GUARANTY](index=62&type=section&id=ARTICLE%20IX%20CONTINUING%20GUARANTY) This article establishes the absolute and unconditional guaranty provided by each Guarantor for the Borrower's obligations, detailing the terms and conditions [Guaranty](index=62&type=section&id=9.01%20Guaranty) This section establishes that each Guarantor provides an absolute and unconditional joint and several guarantee for all 'Included Obligations', acting as a guarantee of payment [Guaranty Terms and Conditions](index=63&type=section&id=9.02%20-%209.12) These sections detail the mechanics of the guaranty, including Lender's rights, Guarantors' waivers of defenses, subrogation, and conditions for release - A 'keepwell' provision requires Qualified ECP Guarantors to provide financial support to other Loan Parties to ensure their obligations under swap contracts can be met, for purposes of the Commodity Exchange Act[327](index=327&type=chunk) [ARTICLE X: MISCELLANEOUS](index=65&type=section&id=ARTICLE%20X%20MISCELLANEOUS) This article covers general administrative and legal provisions, including amendments, notices, expenses, assignments, confidentiality, and governing law [Amendments, Notices, and Expenses](index=65&type=section&id=10.01%20-%2010.05) This group of sections covers administrative and legal boilerplate, specifying amendment requirements, notice procedures, and indemnification for Lender's expenses [Assignments, Confidentiality, and Setoff](index=68&type=section&id=10.06%20-%2010.09) These sections address the transferability of the agreement, confidentiality of information, and the Lender's right to set off deposits upon an Event of Default [Governing Law; Jurisdiction; Etc.](index=71&type=section&id=10.13%20Governing%20Law%3B%20Jurisdiction%3B%20Etc.) This section establishes that the agreement is governed by New York law and specifies New York courts as the venue for legal proceedings - The agreement is governed by the law of the **State of New York**[351](index=351&type=chunk) [Waiver of Jury Trial](index=72&type=section&id=10.14%20Waiver%20of%20Jury%20Trial) This section contains an irrevocable waiver by all parties of their right to a trial by jury in any legal proceeding related to the credit agreement [SCHEDULES AND EXHIBITS](index=78&type=section&id=SCHEDULES%20AND%20EXHIBITS) This section lists and briefly describes the supplementary schedules and exhibits that form an integral part of the Credit Agreement [Schedule 1.01(a): Certain Addresses for Notices; Lender's Office](index=78&type=section&id=Schedule%201.01%28a%29) This schedule provides the official contact information and addresses for delivering notices to the Borrower, other Loan Parties, and the Lender [Exhibit A: Form of Compliance Certificate](index=79&type=section&id=Exhibit%20A) This exhibit provides the template for the Compliance Certificate, including the detailed calculation for the Financial Covenant (Consolidated Leverage Ratio) [Exhibit B: Form of Joinder Agreement](index=86&type=section&id=Exhibit%20B) This exhibit contains the form of the Joinder Agreement to be executed by any new subsidiary required to become a Guarantor [Exhibit C: Form of Loan Notice](index=88&type=section&id=Exhibit%20C) This exhibit provides the template for the Loan Notice that the Borrower must use to request new borrowings, conversions, or continuations of loans [Exhibit D: Form of Notice of Loan Prepayment](index=90&type=section&id=Exhibit%20D) This exhibit contains the form that the Borrower must use to notify the Lender of its intention to prepay outstanding loans
Dolby Laboratories Reports Fourth Quarter and Fiscal Year 2024 Financial Results
Prnewswire· 2024-11-19 21:15
Core Insights - Dolby Laboratories reported strong financial results for the fourth quarter and fiscal year 2024, with total revenue of $305 million for Q4 and $1.27 billion for the full year, showing growth in net income and earnings per share compared to the previous year [2][3]. Financial Highlights - Fourth Quarter Fiscal 2024: - Total revenue was $305 million, up from $291 million in Q4 fiscal 2023 - GAAP net income was $59 million ($0.61 per diluted share), compared to $9 million ($0.09 per diluted share) in Q4 fiscal 2023 - Non-GAAP net income was $78 million ($0.81 per diluted share), compared to $64 million ($0.65 per diluted share) in Q4 fiscal 2023 [2] - Full Year Fiscal 2024: - Total revenue was $1.27 billion, down from $1.30 billion in fiscal 2023 - GAAP net income was $262 million ($2.69 per diluted share), compared to $201 million ($2.05 per diluted share) in fiscal 2023 - Non-GAAP net income was $369 million ($3.79 per diluted share), compared to $348 million ($3.56 per diluted share) in fiscal 2023 - Cash flows from operations were $327 million, down from $367 million in fiscal 2023 [3] Recent Business Developments - Dolby closed the acquisition of GE Licensing, enhancing its imaging patent portfolio and expected to be accretive to margins and earnings in fiscal 2025 [5] - The company acquired THEO Technologies to improve Dolby.io's real-time streaming capabilities [5] - Dolby expanded its automotive partnerships, now having over 20 partners supporting Dolby Atmos, up from 10 partners a year ago [5] - Major product launches supporting Dolby technologies include Apple's iPhone 16, Xiaomi's new 4K QLED TVs, and Lenovo's new Thinkpad models [5] Upcoming Events - Dolby will host an investor event at CES on January 8, 2025, to showcase its technologies [6] Dividend Announcement - Dolby announced a cash dividend of $0.33 per share, payable on December 10, 2024, to stockholders of record as of December 3, 2024 [7] Credit Facility - Dolby entered into a $250 million revolving credit facility with Bank of America, which includes $150 million of uncommitted incremental capacity [8] Financial Outlook - For Q1 fiscal 2025, Dolby estimates total revenue between $330 million and $360 million, with licensing revenue between $305 million and $335 million [11] - For the full year fiscal 2025, total revenue is expected to range from $1.33 billion to $1.39 billion [12]
Dolby to Post Q4 Earnings: Here's What Investors Should Know
ZACKS· 2024-11-18 14:56
Dolby Laboratories Inc (DLB) is slated to report fourth-quarter fiscal 2024 results on Nov. 19.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $305.8 million, which implies growth of 5.3% from the year-ago quarter’s reported figure. DLB expects revenues in the range of $300-$320 million.For the fourth quarter of fiscal 2024, Dolby expects non-GAAP EPS to be between 61 cents and 76 cents. The consensus mark ...
Curious about Dolby Laboratories (DLB) Q4 Performance? Explore Wall Street Estimates for Key Metrics
ZACKS· 2024-11-14 15:15
Wall Street analysts forecast that Dolby Laboratories (DLB) will report quarterly earnings of $0.68 per share in its upcoming release, pointing to a year-over-year increase of 4.6%. It is anticipated that revenues will amount to $305.82 million, exhibiting an increase of 5.3% compared to the year-ago quarter.The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timefr ...
Dolby Laboratories (DLB) Reports Next Week: Wall Street Expects Earnings Growth
ZACKS· 2024-11-12 16:00
Core Viewpoint - The market anticipates Dolby Laboratories (DLB) will report a year-over-year increase in earnings driven by higher revenues for the quarter ended September 2024, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - The consensus EPS estimate for Dolby is $0.68 per share, reflecting a year-over-year increase of 4.6%, while revenues are projected to be $305.82 million, up 5.3% from the previous year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their initial projections during this period [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for Dolby is lower than the consensus estimate, resulting in an Earnings ESP of -1.47%, indicating a bearish outlook from analysts [10][11]. Historical Performance - In the last reported quarter, Dolby exceeded the expected earnings of $0.59 per share by delivering $0.71, achieving a surprise of 20.34%. The company has beaten consensus EPS estimates in the last four quarters [12][13]. Investment Considerations - Despite the potential for an earnings beat, the combination of a negative Earnings ESP and a Zacks Rank of 4 suggests that predicting a positive outcome for Dolby is challenging [11][16].
Cognition Therapeutics Releases New Episode of “Conversations” Podcast: Executing Clinical Research in Dementia with Lewy Bodies (DLB)
GlobeNewswire News Room· 2024-10-22 11:30
Core Insights - Cognition Therapeutics, Inc. is a clinical-stage biopharmaceutical company focused on developing drugs for neurodegenerative disorders, specifically targeting dementia with Lewy bodies (DLB) and Alzheimer's disease [1][4] - The company has launched a new podcast episode during DLB Awareness Month, discussing the clinical research and unique symptoms associated with DLB [1][2] Company Overview - Cognition Therapeutics is engaged in discovering and developing small molecule therapeutics aimed at age-related degenerative disorders of the central nervous system and retina [4] - The lead candidate, CT1812, is currently being investigated in clinical programs for Alzheimer's disease, DLB, and dry age-related macular degeneration [4] SHIMMER Study Details - The SHIMMER study is a Phase 2 clinical trial involving 130 adults with mild-to-moderate DLB, assessing the efficacy of CT1812 [5][6] - Participants are randomized to receive either a placebo or one of two doses of CT1812 (100 mg or 300 mg) for six months, with various cognitive assessments conducted throughout the study [5] - The study is supported by a grant from the National Institute on Aging totaling approximately $30 million and is being conducted at over 30 sites in the U.S. [6]
Dolby Laboratories Announces Conference Call and Webcast for Q4 Fiscal 2024 Financial Results
Prnewswire· 2024-10-10 20:15
SAN FRANCISCO, Oct. 10, 2024 /PRNewswire/ -- Dolby Laboratories, Inc. (NYSE: DLB), a leader in immersive entertainment, will release financial results for the fourth quarter (Q4) and full year of fiscal 2024 after the close of regular trading on Tuesday, November 19, 2024. Members of Dolby management will lead a conference call open to all interested parties to discuss Q4 and full year fiscal 2024 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Tuesday, November 19, 2024. Access t ...
Dolby Unveils Innovative Cloud Video Solutions to Boost Live Streaming
ZACKS· 2024-09-16 15:35
Dolby Laboratories, Inc. (DLB) has launched a new suite of cloud video products and solutions designed for real-time interactive streaming. Available as standalone tools or integrated solutions, they offer superior live sports and entertainment experiences. This launch follows Dolby's recent acquisition of THEO Technologies, a leading provider of premium video streaming tools used by prominent sports, media and entertainment companies globally. THEOads is an advanced ad insertion tool that enhances advertis ...
Why Is Dolby Laboratories (DLB) Up 1.8% Since Last Earnings Report?
ZACKS· 2024-09-06 16:37
Core Viewpoint - Dolby Laboratories reported a mixed performance in its latest earnings, with non-GAAP EPS exceeding estimates while revenues declined year-over-year, prompting a cautious outlook for the remainder of the fiscal year [2][3][10]. Financial Performance - Dolby's Q3 fiscal 2024 non-GAAP EPS was 71 cents, up from 55 cents in the prior-year quarter, surpassing the Zacks Consensus Estimate by 20.3% [2] - Revenues for the quarter were $288.8 million, a decline of 3% year-over-year, but still beating the Zacks Consensus Estimate by 0.9% [2] - Gross profit decreased to $253.1 million from $256.8 million in the year-ago quarter, while total operating expenses fell to $216.3 million from $240.9 million [6] Segment Performance - Licensing revenues were $267 million, down 2% year-over-year, while Products and Services revenues fell 14% to $21.7 million due to weak box office trends and device sales [4] - Broadcast Licensing contributed 36% to total licensing revenues, with Mobile Licensing, Consumer Electronics, PC Licensing, and Other Markets accounting for 11%, 10%, 15%, and 19% respectively [5] Cash Flow and Share Repurchase - For the six months ending June 30, Dolby generated $211.1 million in net cash from operating activities, down from $282.1 million in the prior-year period [7] - The company repurchased nearly 423,000 shares during the quarter, with $72 million remaining in its stock repurchase authorization, and an increase of $350 million to its stock repurchase program was approved [8] Outlook - For Q4 fiscal 2024, Dolby expects GAAP EPS between 31-46 cents and non-GAAP EPS between 61-76 cents, with revenues projected at $300-$320 million [9] - Full-year revenue estimates have been revised down to $1.27-$1.29 billion from a previous estimate of $1.3 billion due to lower-than-anticipated shipments and cinema revenues [10] - Dolby anticipates GAAP operating margin at 20% and non-GAAP operating margin at nearly 31% for the fiscal year [11] Estimate Trends - Recent estimates have shown a downward trend, with the consensus estimate shifting down by 21.39% [12] - Dolby Laboratories currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [14]