Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

November 14, 2023

DOLBY LABORATORIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

001-32431

90-0199783

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

1275 Market Street

San Francisco, CA 94103-1410

(Address of principal executive offices) (Zip Code)

(415) 558-0200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.001 par value	DLB	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02

Results of Operations and Financial Condition.

The following information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On November 16, 2023, Dolby Laboratories, Inc. (the “Company”) issued a press release announcing its financial results for its fiscal quarter and fiscal year ended September 29, 2023. The full text of the press release is furnished as Exhibit 99.1 and is incorporated herein by reference.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Approval of 2024 Dolby Executive Bonus Plan

On November 14, 2023, the Compensation Committee (the “Committee”) of the Board of Directors of the Company adopted an executive cash bonus plan for fiscal 2024, titled the 2024 Dolby Executive Bonus Plan (the “2024 Executive Plan”). A copy of the 2024 Executive Plan is filed with this report as Exhibit 99.2 and is incorporated herein by reference.

Only Company executive officers and certain other officers of the Company who are selected by the Committee are eligible to receive bonuses pursuant to the 2024 Executive Plan. Individual target bonuses are based on a percentage of each executive officer’s base salary. For fiscal 2024, the Committee set the following target bonuses for the Company’s named executive officers, currently consisting of Kevin Yeaman, President and Chief Executive Officer; Andy Sherman, Executive Vice President, General Counsel and Corporate Secretary; Robert Park, Senior Vice President and Chief Financial Officer; John Couling, Senior Vice President, Entertainment; and Shriram Revankar, Senior Vice President, Advanced Technology Group:


Chief Executive Officer:		100% of his calendar base salary
Each other such officer:		65% of each of their respective base salary

The actual bonus amount payable to the Company’s Chief Executive Officer will be determined by multiplying his base salary by his target bonus percentage, and then adjusting such target bonus amount based on the extent to which certain goals for non-GAAP operating income, revenue and/or other metrics are achieved, as determined by the Committee. The actual bonus amount may be less than, or exceed, the Chief Executive Officer’s target bonus, depending on the extent to which the Company meets such goals during the applicable performance period, as determined by the Committee. In addition, the Committee, in its sole discretion, may adjust the amount otherwise payable to the Chief Executive Officer as determined in accordance with the foregoing formula.

The actual bonuses for all other participating named executive officers will be determined by multiplying base salary by the applicable target bonus percentage, and then adjusting such target bonus amount based on (i) the extent to which the non-GAAP operating income, revenue and/or other goals are achieved, and (ii) such other criteria as the Committee, with input from the Chief Executive Officer, in the Committee’s sole and absolute discretion, determines are appropriate to calculate and determine such final bonus amount for any such executive officer. As a result, the actual bonus amount paid to any such executive officer may be less than, or exceed, the executive officer’s target bonus. In addition, the Chief Executive Officer may recommend increases or decreases of up to 25% of each such executive officer’s calculated award payout amount, for the Committee to consider in determining the final bonus amount payable.

2024 Executive Plan funding is capped at 150% of target funding.

No actual bonus payment to any named executive officer may exceed any applicable limitations set forth in the Dolby Laboratories, Inc. 2020 Stock Plan, under which the 2024 Executive Plan was established.

Item 8.01

Other Events

Declaration of Dividend

On November 16, 2023, the Company announced a cash dividend of $0.30 per share of Class A and Class B Common Stock, payable on December 5, 2023 to stockholders of record as of the close of business on November 28, 2023.

Disclosure Channels to Disseminate Information

The Company disseminates information to the public about the Company, its products, services and other matters through various channels, including the Company’s website (www.dolby.com), investor relations website (http://investor.dolby.com), SEC filings, press releases, public conference calls and webcasts, in order to achieve broad, non-exclusionary distribution of information to the public. The Company encourages investors and others to review the information it makes public through these channels, as such information could be deemed to be material information.

Section 9 - Financial Statements and Exhibits

ITEM 9.01

Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.		Description

99.1		Press Release of Dolby Laboratories, Inc. dated November 16, 2023

99.2		2024 Dolby Executive Bonus Plan

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		DOLBY LABORATORIES, INC.

By:		/s/ Robert Park
		Robert Park Senior Vice President and Chief Financial Officer (Principal Financial Officer)

Date: November 16, 2023

Exhibit 99.1

Dolby Laboratories Reports Fourth Quarter and Fiscal Year 2023 Financial Results

SAN FRANCISCO, November 16, 2023 — Dolby Laboratories, Inc. (NYSE:DLB) today announced the company’s financial results for the fourth quarter and full year of fiscal 2023.

“We finished our fiscal year on a solid note,” said Kevin Yeaman, President and CEO, Dolby Laboratories. “We remain confident in our opportunity to drive long term growth in TVs, Mobile, and Automotive as Dolby enabled content continues to proliferate and attract more consumers.”

Fourth Quarter Fiscal 2023 Financial Highlights

•

Total revenue was $290.6 million, compared to $278.2 million for the fourth quarter of fiscal 2022.

•

GAAP net income was $9.2 million, or $0.09 per diluted share, compared to GAAP net income of $27.8 million, or $0.28 per diluted share, for the fourth quarter of fiscal 2022. On a non-GAAP basis, fourth quarter net income, which excludes a restructuring charge of approximately $30 million described in more detail below, was $63.9 million, or $0.65 per diluted share, compared to $52.8 million, or $0.54 per diluted share, for the fourth quarter of fiscal 2022.

•

Cash flow from operations was $85.0 million, compared to $51.3 million for the fourth quarter of fiscal 2022.

•

Dolby repurchased 0.3 million shares of its common stock and ended the quarter with approximately $212 million of stock repurchase authorization available going forward.

Full Year Fiscal 2023 Financial Highlights

•

Total revenue was $1.30 billion, compared to $1.25 billion for the full year of fiscal 2022.

•

GAAP net income was $200.7 million, or $2.05 per diluted share, compared to GAAP net income of $184.1 million, or $1.81 per diluted share, for the full year of fiscal 2022. On a non-GAAP basis, full year net income was $348.0 million, or $3.56 per diluted share, compared to $319.9 million, or $3.14 per diluted share, for the full year of fiscal 2022.

•

Cash flows from operations were $367.1 million, compared to $318.6 million for the full year of fiscal 2022.

•

We held cash, cash equivalents, and investments of $982.3 million as of September 29, 2023.

A complete listing of Dolby’s non-GAAP measures are described and reconciled to the corresponding GAAP measures at the end of this release.

Fourth Quarter Business Highlights

•

Apple debuted its latest iPhones powered by Dolby Vision and Dolby Atmos, including the iPhone 15, iPhone 15 Plus, iPhone 15 Pro, and iPhone 15 Pro Max.

•

Yangwang announced its first car, the Yangwang U8 model, supporting Dolby Atmos.

•

Polytron, the largest TV OEM in Indonesia, launched TVs that support Dolby Vision and Dolby Atmos.

•

Hoichoi, an Indian Over-The-Top platform, adopted Dolby Atmos and Dolby Vision.

•

Honor, a Chinese smart phone manufacturer, recently launched smart phones that support Dolby Vision playback.

•

TCL’s 2024 TV lineup will support Dolby Atmos FlexConnect, a new solution that enables consumers to place wireless speakers, paired with a TV, anywhere in a room and automatically get an immersive Dolby Atmos experience.

Dividend

Today, Dolby announced a cash dividend of $0.30 per share of Class A and Class B common stock, payable on December 5, 2023, to stockholders of record as of the close of business on November 28, 2023.

Financial Outlook

Dolby’s financial outlook relies on estimates of royalty-based revenue that take into consideration the macroeconomic effect of certain events, including supply chain constraints, international conflicts, and consumer demand for electronic products. In addition, actual results could differ materially from the estimates Dolby is providing below due in part to the increased uncertainty resulting from these items as well as the geopolitical instability and continuing concerns around inflation and elevated interest rates. The uncertainty resulting from these factors has greatly reduced its visibility into its future outlook. To the extent possible, the estimates Dolby is providing for future periods reflect certain assumptions about the potential impact of certain of these items, based upon a consideration of currently available external and internal data and information. These assumptions are subject to risks and uncertainties. For more information, see “Forward-Looking Statements” in this press release for a description of certain risks that Dolby faces, and the section captioned “Risk Factors” in its Annual Report on Form 10-K for fiscal 2023, to be filed on or around the date hereof.

Dolby is providing the following estimates for its first quarter of fiscal 2024:

•

Total revenue is estimated to range from $300 million to $330 million.

•

Gross margins are anticipated to range from 89% to 90%.

•

Operating expenses are anticipated to range from $220 million to $230 million on a GAAP basis and from $180 million to $190 million on a non-GAAP basis.

•

Effective tax rate is anticipated to be approximately 23% on a GAAP basis and approximately 20% on a non-GAAP basis.

•

Diluted earnings per share is anticipated to range from $0.44 to $0.59 on a GAAP basis and from $0.80 to $0.95 on a non-GAAP basis.

Dolby is providing the following estimates for the full year of fiscal 2024:

•

Total revenue is expected to be approximately $1.30 billion.

•

Gross margins are anticipated to be approximately 89%.

•

Operating expenses are anticipated to range from $885 million to $895 million on a GAAP basis and from $740 million to $750 million on a non-GAAP basis.

•

Dolby expects operating margins on a GAAP basis to be approximately 20% and on a non-GAAP basis to be approximately 32%.

•

Diluted earnings per share is anticipated to range from $2.30 to $2.45 on a GAAP basis and from $3.60 to $3.75 on a non-GAAP basis.

Conference Call Information

Members of Dolby management will lead a conference call open to all interested parties to discuss fourth quarter and full year fiscal 2023 financial results for Dolby Laboratories at 2:00 p.m. PT (5:00 p.m. ET) on Thursday, November 16, 2023. Access to the teleconference will be available at http://investor.dolby.com or by dialing 1-888-210-2212 (+1-646-960-0390 for international callers) and entering confirmation code 5587811.

A replay of the call will be available from 5:00 p.m. PT (8:00 p.m. ET) on Thursday, November 16, 2023, until 8:59 p.m. PT (11:59 p.m. ET) on Thursday, November 23, 2023 by dialing 1-800-770-2030 (+1-647-362-9199 for international callers) and entering the confirmation code 5587811. An archived version of the teleconference will also be available on the Dolby website, http://investor.dolby.com.

Non-GAAP Financial Information

To supplement Dolby’s financial statements presented on a GAAP basis, Dolby management uses, and Dolby provides to investors, certain non-GAAP financial measures as 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 and performance. Specifically, Dolby excludes the following as adjustments from one or more of its non-GAAP financial measures:

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

Amortization of acquisition-related intangibles: Dolby amortizes intangible assets acquired in connection with acquisitions. These intangible assets consist of patents and technology, customer relationships, and other intangibles. Dolby records amortization charges relating to these intangible assets in its GAAP financial statements, and Dolby views these charges as items arising from pre-acquisition activities that are determined by the timing and valuation of its acquisitions. As these amortization charges do not directly correlate to its operations during any particular period, Dolby excludes these charges to facilitate an evaluation of its current operating performance and comparisons to its past operating results.

Other operating income adjustments: In the second quarter of fiscal 2022, we recorded an expense of $34.4 million related to a one-time settlement and accrual in connection with indemnification requests under commercial agreements that we assumed as part of an acquisition in 2014 related to our cinema products business. We expect this settlement and related accrual to fully resolve this matter. We have excluded this item as it was an unusual, non-recurring event that is not representative of our normal operating activities and therefore, excluding this amount enables a more effective comparison to our past operating performance.

Restructuring charges: Restructuring charges are costs associated with restructuring plans and primarily relate to costs associated with exit or disposal activities, employee severance benefits, and asset impairments. For the fourth quarter of fiscal 2023, we excluded from non-GAAP net income and diluted earnings per share a restructuring charge of about $30 million comprised of approximately $13 million for severance and related benefits and an impairment loss of approximately $17 million related primarily to internally developed software for projects we are no longer pursuing. Dolby excludes restructuring costs, including any adjustments to charges recorded in prior periods (which may be credits), as Dolby believes that these costs are not representative of its normal operating activities and therefore, excluding these amounts enables a more effective comparison of its past operating performance and to that of other companies.

Income tax adjustments: The income tax effects of the aforementioned non-GAAP adjustments do not directly correlate to its operating performance so Dolby believes that excluding such income tax effects provides a more meaningful view of its underlying operating results to management and investors.

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, including as a means to evaluate period-to-period comparisons. Dolby’s management does not itself, nor does it suggest that investors should, consider non-GAAP financial measures in isolation from, superior to, 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 and below. 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 investor relations website, http://investor.dolby.com.

Forward-Looking Statements

Certain statements in this press release, including, but not limited to, expected financial results for the first quarter of fiscal 2024 and full year fiscal 2024, Dolby’s ability to expand existing business, navigate challenging periods, pursue its long-term growth opportunities, and advance its other long-term objectives are “forward-looking statements” that inherently involve substantial risks and uncertainties. These forward-looking statements are based on management’s current expectations, and as a result of certain risks and uncertainties, actual results may differ materially from those provided. The following important factors, without limitation, could cause actual results to differ materially from those in the forward-looking statements: the potential impacts of economic conditions on Dolby’s business operations, financial results, and financial position (including the impact to Dolby partners and disruption of the supply chain and delays in shipments of consumer products; the level at which Dolby technologies are incorporated into products and the consumer demand for such products; delays in the development and release of new products or services that contain Dolby technologies; delays in royalty reporting or delinquent payment by partners or licensees; lengthening sales cycles; the impact to the overall cinema market including adverse impact to Dolby’s revenue recognized on box-office sales and demand for cinema products and services; and macroeconomic conditions that affect discretionary spending and access to products that contain Dolby technologies); risks associated with geopolitical issues and international conflicts; risks associated with trends in the markets in which Dolby operates, including the broadcast, mobile, consumer electronics, PC, and other markets; the loss of, or reduction in sales by, a key customer, partner, or licensee; pricing pressures; risks relating to changing trends in the way that content is distributed and consumed; risks relating to conducting business internationally, including trade restrictions and changes in diplomatic or trade relationships; risks relating to maintaining patent coverage; the timing of Dolby’s receipt of royalty reports and payments from its licensees, including recoveries; changes in tax regulations; timing of revenue recognition under licensing agreements and other contractual arrangements; Dolby’s ability to develop, maintain, and strengthen relationships with industry participants; Dolby’s ability to develop and deliver innovative products and technologies in response to new and growing markets; competitive risks; risks associated with conducting business in China and other countries that have historically limited recognition and enforcement of intellectual property and contractual rights; risks associated with the health of the motion picture and cinema industries generally, including the potential impacts of the recent strikes by the WGA and SAG-AFTRA; Dolby’s ability to increase its revenue streams and to expand its business generally, and to continue to expand its business beyond its current technology offerings; risks associated with acquiring and successfully integrating businesses or technologies; and other risks detailed in Dolby’s SEC filings and reports, including the risks identified under the section captioned “Risk Factors” in its Annual Report on Form 10-K filed on or around the date hereof. Dolby may not actually achieve the plans, intentions, or expectations disclosed in its forward-looking statements. Forward-looking statements are based upon information available to us as of the date of this press release, and while Dolby believes such information forms a reasonable basis for such statements, such information may be limited or incomplete. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Except as required by law, Dolby disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise.

About Dolby Laboratories

Dolby Laboratories (NYSE: DLB) is based in San Francisco, California with offices around the globe. From movies and TV shows, to apps, music, sports and gaming, Dolby transforms the science of sight and sound into spectacular experiences for billions of people worldwide. Dolby partners with artists, storytellers, developers, and businesses to revolutionize entertainment and communications with Dolby Atmos, Dolby Vision, Dolby Cinema, and Dolby.io.

Dolby, Dolby Atmos, Dolby Vision, Dolby Cinema, Dolby.io, and the double-D symbol are among the registered and unregistered trademarks of Dolby Laboratories in the United States and/or other countries. Other trademarks remain the property of their respective owners.

DOLBY LABORATORIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts; unaudited)


	Fiscal Quarter Ended						Fiscal Year Ended
	September 29, 2023			September 30, 2022			September 29, 2023			September 30, 2022
Revenue:
Licensing	$	265,203		$	249,127		$	1,197,930		$	1,164,533
Products and services		25,359			29,077			101,814			89,260

Total revenue		290,562			278,204			1,299,744			1,253,793

Cost of revenue:
Cost of licensing		14,556			16,234			64,890			61,597
Cost of products and services		20,996			20,945			87,676			79,763

Total cost of revenue		35,552			37,179			152,566			141,360

Gross profit		255,010			241,025			1,147,178			1,112,433

Operating expenses:
Research and development		70,426			62,070			271,523			261,174
Sales and marketing		90,870			90,202			354,364			358,716
General and administrative		66,612			57,065			258,477			275,315
Restructuring charges		30,596			4,580			47,061			10,623

Total operating expenses		258,504			213,917			931,425			905,828

Operating income		(3,494	)		27,108			215,753			206,605

Other income/(expense):
Interest income/(expense), net		9,280			3,199			28,086			6,174
Other income, net		3,247			667			6,214			2,500

Total other income		12,527			3,866			34,300			8,674

Income before income taxes		9,033			30,974			250,053			215,279
(Provision for)/benefit from income taxes		875			(3,215	)		(48,409	)		(31,381	)

Net income including noncontrolling interest		9,908			27,759			201,644			183,898
Less: net (income)/loss attributable to noncontrolling interest		(722	)		(3	)		(988	)		189

Net income attributable to Dolby Laboratories, Inc.	$	9,186		$	27,756		$	200,656		$	184,087

Net income per share:
Basic	$	0.10		$	0.29		$	2.10		$	1.84
Diluted	$	0.09		$	0.28		$	2.05		$	1.81
Weighted-average shares outstanding:
Basic		95,701			97,077			95,771			99,990
Diluted		97,678			98,461			97,733			101,983

DOLBY LABORATORIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands; unaudited)


	September 29, 2023			September 30, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	745,364		$	620,127
Restricted cash		72,602			8,244
Short-term investments		139,148			189,213
Accounts receivable, net		262,245			243,593
Contract assets, net		182,130			176,093
Inventories, net		35,623			23,549
Prepaid expenses and other current assets		50,692			50,075

Total current assets		1,487,804			1,310,894
Long-term investments		97,812			102,514
Property, plant, and equipment, net		481,581			513,481
Operating lease right-of-use assets		40,199			46,530
Goodwill and intangible assets, net		575,836			477,412
Deferred taxes		201,860			183,568
Other non-current assets		94,674			55,149

Total assets	$	2,979,766		$	2,689,548

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	20,925		$	14,171
Accrued liabilities		351,399			230,237
Income taxes payable		4,769			1,265
Contract liabilities		31,505			18,588
Operating lease liabilities		13,628			13,257

Total current liabilities		422,226			277,518
Non-current contract liabilities		39,997			23,203
Non-current operating lease liabilities		37,020			37,685
Other non-current liabilities		108,339			100,122

Total liabilities		607,582			438,528
Stockholders’ equity:
Class A common stock		53			53
Class B common stock		41			41
Retained earnings		2,391,990			2,297,730
Accumulated other comprehensive loss		(36,984	)		(51,641	)

Total stockholders’ equity – Dolby Laboratories, Inc.		2,355,100			2,246,183
Noncontrolling interest		17,084			4,837

Total stockholders’ equity		2,372,184			2,251,020

Total liabilities and stockholders’ equity	$	2,979,766		$	2,689,548

DOLBY LABORATORIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands; unaudited)


	Fiscal Year Ended
	September 29, 2023			September 30, 2022
Operating activities:
Net income including noncontrolling interest	$	201,644		$	183,898
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		82,558			88,461
Stock-based compensation		118,486			114,925
Amortization of operating lease right-of-use assets		12,956			15,148
Amortization of premium on investments		(860	)		1,440
Provision for/(benefit from) credit losses		(793	)		5,460
Deferred income taxes		(18,337	)		(29,465	)
Impairment loss on internally developed software		16,225			—
Other non-cash items affecting net income		(2,800	)		(5,037	)
Changes in operating assets and liabilities:
Accounts receivable, net		47,779			(14,314	)
Contract assets, net		347			6,300
Inventories		(13,226	)		(11,759	)
Operating lease right-of-use assets		(8,817	)		266
Prepaid expenses and other assets		3,868			8,760
Accounts payable and accrued liabilities		(52,315	)		(33,542	)
Income taxes, net		(8,722	)		8,446
Contract liabilities		(8,379	)		(413	)
Operating lease liabilities		(5,818	)		(15,399	)
Other non-current liabilities		3,285			(4,599	)

Net cash provided by operating activities		367,081			318,576

Investing activities:
Purchases of marketable securities		(172,955	)		(311,313	)
Proceeds from sales of marketable securities		54,964			9,459
Proceeds from maturities of marketable securities		176,833			108,546
Purchases of property, plant, and equipment		(30,339	)		(47,928	)
Business combinations, net of cash and restricted cash acquired		25,703			(38,171	)
Purchases of intangible assets		—			(11,528	)
Purchases of other investments		—			(5,000	)

Net cash provided by/(used in) investing activities		54,206			(295,935	)

Financing activities:
Proceeds from issuance of common stock		47,781			57,848
Repurchase of common stock		(149,276	)		(530,486	)
Payment of cash dividend		(103,407	)		(100,067	)
Distribution to noncontrolling interest		(266	)		(1,435	)
Shares repurchased for tax withholdings on vesting of restricted stock		(31,144	)		(36,418	)
Payment of deferred consideration for prior business combinations		(500	)		—

Net cash used in financing activities		(236,812	)		(610,558	)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash		5,120			(16,744	)

Net increase/(decrease) in cash, cash equivalents, and restricted cash		189,595			(604,661	)
Cash, cash equivalents, and restricted cash at beginning of period		628,371			1,233,032

Cash, cash equivalents, and restricted cash at end of period	$	817,966		$	628,371

GAAP to Non-GAAP Reconciliations

(unaudited)

The following tables present Dolby’s GAAP financial measures reconciled to the non-GAAP financial measures included in this release for the fourth quarters of fiscal 2023 and fiscal 2022 and fiscal years ended September 29, 2023 and September 30, 2022:


Net income:	Fiscal Quarter Ended						Fiscal Year Ended
(in thousands)	September 29, 2023			September 30, 2022			September 29, 2023			September 30, 2022
GAAP net income	$	9,186		$	27,756		$	200,656		$	184,087
Stock-based compensation⁽¹⁾		28,195			26,962			118,486			114,925
Amortization of acquisition-related intangibles ⁽²⁾		3,306			1,829			10,056			9,108
Other operating income adjustments		—			—			—			34,400
Restructuring charges		30,596			4,580			47,061			10,623
Income tax adjustments		(7,339	)		(8,367	)		(28,249	)		(33,235	)

Non-GAAP net income	$	63,944		$	52,760		$	348,010		$	319,908
(1) Stock-based compensation included in above line items:
Cost of products and services	$	388		$	413		$	1,697		$	1,819
Research and development		9,643			8,632			39,472			37,061
Sales and marketing		9,279			9,568			40,038			41,326
General and administrative		8,885			8,349			37,279			34,719
(2) Amortization of acquisition-related intangibles included in above line items:
Cost of licensing	$	62		$	61		$	248		$	1,464
Cost of products and services		650			851			3,248			3,109
Research and development		—			124			253			507
Sales and marketing		721			793			3,137			3,772
General and administrative		1,873			—			3,170			256


Diluted earnings per share:	Fiscal Quarter Ended						Fiscal Year Ended
	September 29, 2023			September 30, 2022			September 29, 2023			September 30, 2022
GAAP diluted earnings per share	$	0.09		$	0.28		$	2.05		$	1.81
Stock-based compensation		0.29			0.27			1.21			1.13
Amortization of acquisition-related intangibles		0.03			0.02			0.10			0.09
Other operating income adjustments		—			—			—			0.34
Restructuring charges		0.31			0.05			0.48			0.10
Income tax adjustments		(0.07	)		(0.08	)		(0.28	)		(0.33	)

Non-GAAP diluted earnings per share	$	0.65		$	0.54		$	3.56		$	3.14
Weighted-average shares outstanding - diluted (in thousands)		97,678			98,461			97,733			101,983

The following tables present a reconciliation between GAAP and non-GAAP versions of the estimated financial measures for the first quarter of fiscal 2024 and full year fiscal 2024 included in this release:


Operating expenses *(in millions)*:	Q1 2024			Fiscal 2024
GAAP operating expenses (low - high end of range)	$	220 - $230		$	885 - $895
Stock-based compensation		(32	)		(128	)
Amortization of acquisition-related intangibles		(3	)		(12	)
Restructuring charges		(5	)		(5	)

Non-GAAP operating expenses (low - high end of range)	$	180 - $190		$	740 - $750


Operating margin:	Fiscal 2024
GAAP operating margin		20	% +/-
Stock-based compensation		10	%
Amortization of acquisition-related intangibles		1	%
Restructuring charges		1	%

Non-GAAP operating margin		32	% +/-


Effective tax rate:	Q1 2024
GAAP effective tax rate		23 %
Stock-based compensation (low - high end of range)		(2%) - (0%	)
Amortization of acquisition-related intangibles (low - high end of range)		(1%) - 0%
Restructuring charges (low - high end of range)		(1%) - 1%

Non-GAAP effective tax rate		20%


Diluted earnings per share:	Q1 2024						Fiscal 2024
	Low			High			Low			High
GAAP diluted earnings per share	$	0.44		$	0.59		$	2.30		$	2.45
Stock-based compensation		0.34			0.34			1.31			1.31
Amortization of acquisition-related intangibles		0.04			0.04			0.14			0.14
Restructuring charges		0.05			0.05			0.05			0.05
Income tax adjustments		(0.07	)		(0.07	)		(0.20	)		(0.20	)

Non-GAAP diluted earnings per share	$	0.80		$	0.95		$	3.60		$	3.75

Weighted-average shares outstanding - diluted (in millions)		98			98			98			98

Investor Contact:

Peter Goldmacher

415-254-7415

peter.goldmacher@dolby.com

Media Contact:

Rachel Lowery

media@dolby.com

EXHIBIT 99.2

2024 DOLBY EXECUTIVE BONUS PLAN



Eligibility:		Eligible employees are the executive officers and other officers of the Company and its subsidiaries who are selected by the Compensation Committee (“Executives”).

Bonus Amounts:		The amount each Executive may be eligible to receive under the 2024 Executive Bonus Plan (the “Executive Plan”) will be determined as summarized below and pursuant to the level of achievement by the Company of goals for non-GAAP operating income, revenue and/or other metrics, as determined by the Compensation Committee. For purposes of this Executive Plan, “non-GAAP operating income” shall be defined as the Company’s GAAP operating income excluding amounts related to stock based compensation, restructuring charges, and the amortization of intangibles from business combinations. In addition, at the discretion of the Committee, the financial impact of M&A transactions will be excluded (either by adjusting the revenue or operating income results or adjusting the predetermined goals as determined by the Committee).

Target Bonus:		Target bonuses for Executives will be established and approved by the Compensation Committee. Each Executive’s target bonus will be a percentage of the Executive’s base salary at the applicable fiscal year-end or performance period-end, as determined by the Compensation Committee.

Actual Bonus:		The Chief Executive Officer’s actual bonus will be determined by multiplying his base salary by his target bonus percentage and then adjusting such target bonus to reflect the extent to which the Company meets the non-GAAP operating income, revenue or other goals. The actual bonus amount may be less than, or exceed, the Chief Executive Officer’s target bonus, depending on the extent to which the Company meets the applicable goals. The Compensation Committee, in its sole discretion, may adjust the amount otherwise payable to the Chief Executive Officer as determined in accordance with the foregoing formula.

		The actual bonuses for all other eligible Executives will be determined by multiplying base salary by the applicable target bonus percentage and then adjusting such number to reflect the (i) the extent to which the Company meets the non-GAAP operating income, revenue and/or other goals and (ii) based upon such other criteria as the Compensation Committee, in its sole and absolute discretion, determines is appropriate to calculate and determine such final bonus amount for any such eligible Executive. The Chief Executive Officer may recommend increases or decreases of up to 25% of each such executive officer’s calculated award payout amount, for the Compensation Committee to consider in determining the final bonus amount payable.

Bonus Payment Approval:		Specific measurable Company revenue, non-GAAP operating income and/or other targets (as applicable) are established by the Compensation Committee, typically near the commencement of the 2024 fiscal year or performance period (as applicable). All Executive bonuses must be approved by the Compensation Committee prior to payment.

		Payment of the actual bonuses under the Executive Plan will be made no later than the later of: (i) the 15^th day of the third month following the end of the Company’s fiscal year in which the bonus was earned, or (ii) March 15^th of the year following the calendar year in which the bonus was earned. To the extent permitted by applicable law, employees must be employed by the Company at the time of payment of actual bonuses under the Executive Plan in order to be eligible for their actual bonus.


Subject to Plan:		The bonus goal, and the terms of this Executive Plan, are subject to the applicable terms and conditions of the 2020 Stock Plan.

Maximum Bonus Amount:		Notwithstanding anything to the contrary in this Executive Plan, no “Service Provider,” as that term is defined in the 2020 Stock Plan, may receive a bonus, in any fiscal year, greater than the individual Service Provider’s fiscal year limitation authorized by the terms of the 2020 Stock Plan.

Subject to Reduction, Cancellation, Forfeiture or Recoupment:		Payments and awards made or granted under the Executive Plan shall be subject to reduction, cancellation, forfeiture or recoupment pursuant to the Company’s Policy on Recoupment of Incentive Compensation, as amended and restated effective August 1, 2023, as may be amended from time to time.

Document and Entity Information	Nov. 14, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Nov. 14, 2023
Entity Registrant Name	DOLBY LABORATORIES, INC.
Entity Incorporation State Country Code	DE
Entity File Number	001-32431
Entity Tax Identification Number	90-0199783
Entity Address Address Line 1	1275 Market Street
Entity Address City Or Town	San Francisco
Entity Address State Or Province	CA
Entity Address Postal Zip Code	94103-1410
City Area Code	415
Local Phone Number	558-0200
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Class A common stock, $0.001 par value
Trading Symbol	DLB
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0001308547
Amendment Flag	false