EXHIBIT 99.1

Dolby Laboratories Reports Fourth Quarter and Fiscal 2018 Financial Results

SAN FRANCISCO, Oct. 24, 2018 (GLOBE NEWSWIRE) -- Dolby Laboratories, Inc. (NYSE:DLB) today announced the Company's financial results for the fourth quarter (Q4) and fiscal year that ended September 28, 2018. For the fourth quarter, Dolby reported total revenue of $265.3 million, compared to $242.0 million for the fourth quarter of fiscal 2017. For fiscal 2018, Dolby reported total revenue of $1.17 billion, compared to $1.08 billion for fiscal 2017.

“2018 was a strong year for Dolby, especially the momentum we built for the combined Dolby Vision and Dolby Atmos experience,” said Kevin Yeaman, President and CEO, Dolby Laboratories. “We started the year with OLED TVs from LG that had both Dolby Vision and Dolby Atmos, and then we added devices and content throughout the year from many key partners including Apple, Amazon, Microsoft, Netflix, and Tencent, just to name a few.”

In 2018, Dolby recorded a discrete tax expense of $121.4 million related to the enactment of the U.S. Tax Cuts and Jobs Act (Tax Reform). Dolby's 2018 provision for income taxes on a GAAP basis of $190.1 million includes this charge which is comprised of the deemed repatriation tax on unremitted earnings of foreign subsidiaries and the re-measurement of deferred tax assets and liabilities.  In the fourth quarter of fiscal 2018 Dolby recorded a $33.2 million true-up to the tax expense originally recorded in Q1, resulting in a tax benefit for the quarter of $8.3 million.

Fourth quarter GAAP net income was $50.1 million, or $0.47 per diluted share, compared to net income of $21.8 million, or $0.21 per diluted share, for the fourth quarter of fiscal 2017. On a non-GAAP basis, fourth quarter net income was $46.8 million, or $0.44 per diluted share, compared to $46.6 million, or $0.45 per diluted share, for the fourth quarter of fiscal 2017. Dolby's non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.

Fiscal 2018 GAAP net income was $122.2 million, or $1.14 per diluted share, compared to $201.8 million, or $1.95 per diluted share for fiscal 2017. On a non-GAAP basis, fiscal 2018 net income was $313.2 million, or $2.93 per diluted share, compared to $269.7 million, or $2.61 per diluted share, for fiscal 2017.

Dividend

Today, Dolby announced a cash dividend of $0.19 per share of Class A and Class B common stock, payable on November 14, 2018, to stockholders of record as of the close of business on November 5, 2018.

Financial Outlook and Additional Information

In light of the company's transition to ASC 606 beginning Q1 2019, Dolby will provide FY19 guidance during the call as well as additional information related to the new accounting standard.  Additionally, following the conference call, Dolby will post supplemental information describing Dolby's transition to accounting standard ASC 606 and the fiscal 2019 outlook on Dolby's investor relations website, http://investor.dolby.com/.

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss Q4 and fiscal 2018 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Wednesday, October 24, 2018. Access to the teleconference will be available over the Internet from http://investor.dolby.com/events.cfm or by dialing 1-866-548-4713. International callers can access the conference call at 1-323-794-2093.

A replay of the call will be available from 5:00 p.m. PT on Wednesday, October 24, 2018, until 9:00 p.m. PT on Wednesday, October 31, 2018, by dialing 1-844-512-2921 (international callers can access the replay by dialing 1-412-317-6671) and entering the confirmation code 8636587. An archived version of the teleconference will also be available on the Dolby Laboratories website, http://investor.dolby.com/events.cfm.

Non-GAAP Financial Information

To supplement Dolby's financial statements presented on a GAAP basis, Dolby provides certain non-GAAP financial measures to provide investors with an additional tool to evaluate Dolby's operating results in a manner that focuses on what Dolby's management believes to be its ongoing business operations. Specifically, we exclude the following as adjustments from one or more of our non-GAAP financial measures:

Stock-based compensation expense:  Stock-based compensation, unlike cash-based compensation, utilizes subjective and complex assumptions in the methodologies used to value the various stock-based award types that we grant. These assumptions may differ from those used by other companies. To facilitate more meaningful comparisons between our underlying operating results and those of other companies, we exclude stock-based compensation expense.

Amortization of acquisition-related intangibles:  We amortize intangible assets acquired in connection with acquisitions. These intangible assets consist of patents and technology, customer relationships, and other intangibles. We record amortization charges relating to these intangible assets in our GAAP financial statements, and we view these charges as items arising from pre-acquisition activities that are determined by the timing and valuation of our acquisitions. As these amortization charges do not directly correlate to our operations during any particular period, and often remain unchanged between reporting periods, we exclude these charges to facilitate an evaluation of our current operating results and comparisons to our past operating performance.

Restructuring charges:  Restructuring charges are costs associated with a formal restructuring plan and primarily relate to employee severance benefits and asset impairments. We exclude restructuring costs, including any adjustments to charges recorded in prior periods, as we believe that these costs are not representative of our normal operating activities and therefore, excluding these amounts enables a more effective comparison to our past operating performance.

Income tax adjustments:  We believe that excluding the income tax effect of the aforementioned non-GAAP adjustments provides a more accurate view of our underlying operating results to management and investors.

Impact from U.S Tax Cuts and Jobs Act (Tax Reform):  The enactment of Tax Reform requires estimates based on Dolby's current understanding of the new tax laws. These charges are the result of a discrete and infrequent event that are not representative of current operating results and therefore, excluding these amounts enables a more effective comparison to our past operating performance.

Using the aforementioned adjustments, Dolby provides various non-GAAP financial measures including, but not limited to: non-GAAP net income, non-GAAP diluted earnings per share, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating margin, and non-GAAP effective tax rate. Dolby's management believes it is useful for itself and investors to review both GAAP and non-GAAP measures to assess the performance of Dolby's business. Dolby's management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Whenever Dolby uses non-GAAP financial measures, it provides a reconciliation of the non-GAAP financial measures to the most closely applicable GAAP financial measures. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures as detailed above. Investors are also encouraged to review Dolby's GAAP financial statements as reported in its US Securities and Exchange Commission (SEC) filings. A reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release and on the Dolby Laboratories investor relations website, http://investor.dolby.com/.

About Dolby Laboratories

Dolby Laboratories (NYSE:DLB) is based in San Francisco with offices in over 20 countries around the globe. Dolby transforms the science of sight and sound into spectacular experiences. Through innovative research and engineering, we create breakthrough experiences for billions of people worldwide through a collaborative ecosystem spanning artists, businesses, and consumers. The experiences people have - in Dolby Vision, Dolby Atmos, Dolby Cinema, Dolby Voice, and Dolby Audio - revolutionize entertainment and communications at the cinema, on the go, in the home, and at work.

Dolby, Dolby Atmos, Dolby Audio, Dolby Cinema, Dolby Vision, Dolby Voice, and the double-D symbol are among the registered and unregistered trademarks of Dolby Laboratories, Inc. in the Unites States and/or other countries. Other trademarks remain the property of their respective owners. DLB-F

DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts; unaudited)

 Fiscal Quarter Ended Fiscal Year Ended
 September 28,
2018
September 29,
2017
 September 28,
2018
September 29,
2017
Revenue:     
Licensing$240,122 $213,370  $1,057,606 $965,792 
Products20,689 23,797  94,552 95,290 
Services4,514 4,881  19,766 20,372 
Total revenue265,325 242,048  1,171,924 1,081,454 
      
Cost of revenue:     
Cost of licensing11,512 9,588  43,492 39,216 
Cost of products15,441 14,638  65,292 61,256 
Cost of services5,007 5,012  19,476 17,835 
Total cost of revenue31,960 29,238  128,260 118,307 
      
Gross margin233,365 212,810  1,043,664 963,147 
      
Operating expenses:     
Research and development60,500 57,822  236,794 233,312 
Sales and marketing85,800 76,386  309,802 296,661 
General and administrative50,403 42,396  197,516 171,686 
Restructuring charges/(credits) 12,856  (446)12,856 
Total operating expenses196,703 189,460  743,666 714,515 
      
Operating income36,662 23,350  299,998 248,632 
      
Other income/expense:     
Interest income5,809 3,066  18,970 9,577 
Interest expense(47)(33) (198)(127)
Other income/(expense), net(464)108  (5,903)(1,438)
Total other income5,298 3,141  12,869 8,012 
      
Income before income taxes41,960 26,491  312,867 256,644 
Provision for income taxes8,270 (4,551) (190,062)(54,217)
Net income including controlling interest50,230 21,940  122,805 202,427 
Less: net (income) attributable to controlling interest(138)(145) (559)(625)
Net income attributable to Dolby Laboratories, Inc.$50,092 $21,795  $122,246 $201,802 
      
Net income per share:     
Basic$0.48 $0.21  $1.18 $1.98 
Diluted$0.47 $0.21  $1.14 $1.95 
Weighted-average shares outstanding:     
Basic103,349 101,959  103,377 101,784 
Diluted106,794 103,530  106,978 103,286 
          

DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands; unaudited)

 September 28,
2018
September 29,
2017
ASSETS  
Current assets:  
Cash and cash equivalents$918,063 $627,017 
Restricted cash7,187 7,351 
Short-term investments178,138 247,757 
Accounts receivable, net137,151 73,750 
Inventories26,206 25,051 
Prepaid expenses and other current assets35,209 30,508 
Total current assets1,301,954 1,011,434 
Long-term investments187,782 314,364 
Property, plant and equipment, net514,182 485,275 
Goodwill and Intangible assets, net512,001 500,735 
Deferred taxes101,070 190,915 
Other non-current assets42,280 30,831 
Total assets$2,659,269 $2,533,554 
   
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$21,922 $14,373 
Accrued liabilities223,594 207,034 
Income taxes payable2,680 1,216 
Deferred revenue23,931 23,150 
Total current liabilities272,127 245,773 
Long-term deferred revenue40,064 36,425 
Other non-current liabilities150,960 107,514 
Total liabilities463,151 389,712 
   
Stockholders’ equity:  
Class A common stock61 58 
Class B common stock41 43 
Additional paid-in capital66,127 61,331 
Retained earnings2,139,154 2,083,063 
Accumulated other comprehensive (loss)(15,832)(7,753)
Total stockholders’ equity – Dolby Laboratories, Inc.2,189,551 2,136,742 
Controlling interest6,567 7,100 
Total stockholders’ equity2,196,118 2,143,842 
Total liabilities and stockholders’ equity$2,659,269 $2,533,554 
       

DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)

 Fiscal Year-To-Date Ended
 September 28,
2018
September 29,
2017
Operating activities:  
Net income including controlling interest$122,805 $202,427 
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization81,283 84,308 
Stock-based compensation71,249 65,343 
Amortization of premium on investments2,473 2,758 
Provision for doubtful accounts2,507 924 
Deferred income taxes89,934 (29,368)
Other non-cash items affecting net income7,570 2,886 
Changes in operating assets and liabilities:  
Accounts receivable(65,723)1,041 
Inventories(6,602)(11,922)
Prepaid expenses and other assets(14,895)(12,411)
Accounts payable and other liabilities15,690 44,453 
Income taxes, net39,738 26,950 
Deferred revenue4,362 23 
Other non-current liabilities1,811 381 
Net cash provided by operating activities352,202 377,793 
   
Investing activities:  
Purchases of investment securities(174,195)(289,530)
Proceeds from sales of investment securities123,058 84,047 
Proceeds from maturities of investment securities237,432 152,324 
Purchases of PP&E(72,814)(99,617)
Payments for business acquisitions, net of cash acquired(22,852) 
Purchase of intangible assets(12,543)(5,250)
Change in restricted cash164 (3,706)
Net cash provided by (used in) investing activities78,250 (161,732)
   
Financing activities:  
Proceeds from issuance of common stock106,162 69,998 
Repurchase of common stock(150,470)(100,000)
Payment of cash dividend(66,155)(57,059)
Distribution to controlling interest(1,022)(2,094)
Shares repurchased for tax withholdings on vesting of restricted stock(22,144)(17,676)
Net cash used in financing activities(133,629)(106,831)
   
Effect of foreign exchange rate changes on cash and cash equivalents(5,777)1,675 
Net increase in cash and cash equivalents291,046 110,905 
Cash and cash equivalents at beginning of period627,017 516,112 
Cash and cash equivalents at end of period$918,063 $627,017 


GAAP to Non-GAAP Reconciliations
(in millions, except per share data); unaudited
      
The following tables present Dolby's GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the fourth quarter of fiscal 2018 and 2017 and fiscal 2018 and fiscal 2017:
      
Net income:Fiscal Quarter Ended Fiscal Year Ended
 September 28,
2018
September 29,
2017
 September 28,
2018
September 29,
2017
GAAP net income$50.1 $21.8  $122.2 $201.8 
Stock-based compensation17.8 16.4  71.2 65.3 
RSU dividend equivalent    0.2 
Amortization of acquisition-related intangibles1.9 2.2  7.7 12.4 
Restructuring charges/(credits), net 12.9  (0.4)12.9 
Impact of Tax Reform(33.2)  121.4  
Income tax adjustments10.2 (6.7) (8.9)(22.9)
Non-GAAP net income$46.8 $46.6  $313.2 $269.7 
      
      
Diluted earnings per share:Fiscal Quarter Ended Fiscal Year Ended
 September 28,
2018
September 29,
2017
 September 28,
2018
September 29,
2017
GAAP diluted earnings per share$0.47 $0.21  $1.14 $1.95 
Stock-based compensation0.17 0.16  0.67 0.63 
Amortization of acquisition-related intangibles0.02 0.02  0.07 0.12 
Restructuring charges/(credits), net 0.12   0.13 
Impact of tax reform(0.31)  1.13  
Income tax adjustments0.09 (0.06) (0.08)(0.22)
Non-GAAP diluted earnings per share$0.44 $0.45  $2.93 $2.61 
      
      
Shares used in computing diluted earnings per share107 104  107 103 
      

Investor Contact:
Elena Carr
Dolby Laboratories
415-645-5583
investor@dolby.com

Media Contact:
Tony Carter
Dolby Laboratories
404-316-0201
tony.carter@dolby.com

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