00013085479/242021Q1FALSE191100013085472020-09-262020-12-25xbrli:shares0001308547us-gaap:CommonClassAMember2021-01-220001308547us-gaap:CommonClassBMember2021-01-22iso4217:USD00013085472020-12-2500013085472020-09-25iso4217:USDxbrli:shares0001308547us-gaap:CommonClassAMember2020-12-250001308547us-gaap:CommonClassAMember2020-09-25dlb:vote0001308547us-gaap:CommonClassBMember2020-09-250001308547us-gaap:CommonClassBMember2020-12-250001308547dlb:TotalLicensingRevenueMember2020-09-262020-12-250001308547dlb:TotalLicensingRevenueMember2019-09-282019-12-270001308547dlb:ProductsAndServicesMember2020-09-262020-12-250001308547dlb:ProductsAndServicesMember2019-09-282019-12-2700013085472019-09-282019-12-270001308547us-gaap:CommonStockMember2020-09-250001308547us-gaap:AdditionalPaidInCapitalMember2020-09-250001308547us-gaap:RetainedEarningsMember2020-09-250001308547us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-250001308547us-gaap:ParentMember2020-09-250001308547us-gaap:NoncontrollingInterestMember2020-09-250001308547us-gaap:RetainedEarningsMember2020-09-262020-12-250001308547us-gaap:ParentMember2020-09-262020-12-250001308547us-gaap:NoncontrollingInterestMember2020-09-262020-12-250001308547us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-262020-12-250001308547us-gaap:AdditionalPaidInCapitalMember2020-09-262020-12-250001308547us-gaap:CommonStockMember2020-09-262020-12-250001308547us-gaap:CommonClassAMemberus-gaap:CommonStockMember2020-09-262020-12-250001308547us-gaap:CommonClassAMemberus-gaap:AdditionalPaidInCapitalMember2020-09-262020-12-250001308547us-gaap:CommonStockMember2020-12-250001308547us-gaap:AdditionalPaidInCapitalMember2020-12-250001308547us-gaap:RetainedEarningsMember2020-12-250001308547us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-250001308547us-gaap:ParentMember2020-12-250001308547us-gaap:NoncontrollingInterestMember2020-12-250001308547us-gaap:CommonStockMember2019-09-270001308547us-gaap:AdditionalPaidInCapitalMember2019-09-270001308547us-gaap:RetainedEarningsMember2019-09-270001308547us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-270001308547us-gaap:ParentMember2019-09-270001308547us-gaap:NoncontrollingInterestMember2019-09-2700013085472019-09-270001308547us-gaap:RetainedEarningsMember2019-09-282019-12-270001308547us-gaap:ParentMember2019-09-282019-12-270001308547us-gaap:NoncontrollingInterestMember2019-09-282019-12-270001308547us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-282019-12-270001308547us-gaap:AdditionalPaidInCapitalMember2019-09-282019-12-270001308547us-gaap:CommonStockMember2019-09-282019-12-270001308547us-gaap:CommonClassAMemberus-gaap:CommonStockMember2019-09-282019-12-270001308547us-gaap:CommonClassAMemberus-gaap:AdditionalPaidInCapitalMember2019-09-282019-12-270001308547us-gaap:CommonStockMember2019-12-270001308547us-gaap:AdditionalPaidInCapitalMember2019-12-270001308547us-gaap:RetainedEarningsMember2019-12-270001308547us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-270001308547us-gaap:ParentMember2019-12-270001308547us-gaap:NoncontrollingInterestMember2019-12-2700013085472019-12-27dlb:segmentxbrli:pure00013085472020-12-262020-12-2500013085472021-09-252020-12-2500013085472022-10-012020-12-250001308547dlb:LicensingBrodcastRevenueMember2020-09-262020-12-250001308547dlb:LicensingBrodcastRevenueMember2019-09-282019-12-270001308547dlb:LicensingMobileRevenueMember2020-09-262020-12-250001308547dlb:LicensingMobileRevenueMember2019-09-282019-12-270001308547dlb:LicensingCERevenueMember2020-09-262020-12-250001308547dlb:LicensingCERevenueMember2019-09-282019-12-270001308547dlb:LicensingPCRevenueMember2020-09-262020-12-250001308547dlb:LicensingPCRevenueMember2019-09-282019-12-270001308547dlb:LicensingOtherRevenueMember2020-09-262020-12-250001308547dlb:LicensingOtherRevenueMember2019-09-282019-12-27dlb:country0001308547country:US2020-09-262020-12-250001308547country:US2019-09-282019-12-270001308547us-gaap:NonUsMember2020-09-262020-12-250001308547us-gaap:NonUsMember2019-09-282019-12-2700013085472019-09-282020-09-250001308547us-gaap:OtherNoncurrentAssetsMember2020-12-250001308547us-gaap:OtherNoncurrentAssetsMember2020-09-250001308547us-gaap:LandAndBuildingMemberus-gaap:OtherCurrentAssetsMember2020-09-250001308547us-gaap:LandAndBuildingMemberus-gaap:OtherCurrentAssetsMember2020-09-262020-12-250001308547us-gaap:CashMember2020-12-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:CashMember2020-12-250001308547us-gaap:CertificatesOfDepositMember2020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:CertificatesOfDepositMember2020-12-250001308547us-gaap:MoneyMarketFundsMember2020-12-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2020-12-250001308547us-gaap:FairValueInputsLevel1Member2020-12-250001308547us-gaap:FairValueInputsLevel2Member2020-12-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:CertificatesOfDepositMember2020-12-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:CertificatesOfDepositMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:CertificatesOfDepositMember2020-12-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesShorttermDebtSecuritiesMember2020-12-250001308547us-gaap:USGovernmentAgenciesShorttermDebtSecuritiesMember2020-09-262020-12-250001308547us-gaap:USGovernmentAgenciesShorttermDebtSecuritiesMember2020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesShorttermDebtSecuritiesMember2020-12-250001308547us-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:CorporateDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:CorporateDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:MunicipalBondsMember2020-12-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:MunicipalBondsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:MunicipalBondsMember2020-12-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:ShortTermInvestmentsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2020-12-250001308547us-gaap:AgencySecuritiesMemberdlb:LongtermInvestmentsMember2020-12-250001308547us-gaap:AgencySecuritiesMemberdlb:LongtermInvestmentsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:AgencySecuritiesMemberdlb:LongtermInvestmentsMember2020-12-250001308547us-gaap:USTreasuryAndGovernmentMemberdlb:LongtermInvestmentsMember2020-12-250001308547us-gaap:USTreasuryAndGovernmentMemberdlb:LongtermInvestmentsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMemberdlb:LongtermInvestmentsMember2020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMemberdlb:LongtermInvestmentsMember2020-12-250001308547us-gaap:CorporateDebtSecuritiesMemberdlb:LongtermInvestmentsMember2020-12-250001308547us-gaap:CorporateDebtSecuritiesMemberdlb:LongtermInvestmentsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberdlb:LongtermInvestmentsMember2020-12-250001308547dlb:LongtermInvestmentsMemberus-gaap:MunicipalBondsMember2020-12-250001308547dlb:LongtermInvestmentsMemberus-gaap:MunicipalBondsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel2Memberdlb:LongtermInvestmentsMemberus-gaap:MunicipalBondsMember2020-12-250001308547us-gaap:OtherLongTermInvestmentsMemberdlb:LongtermInvestmentsMember2020-12-250001308547us-gaap:OtherLongTermInvestmentsMemberdlb:LongtermInvestmentsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:OtherLongTermInvestmentsMemberdlb:LongtermInvestmentsMember2020-12-250001308547dlb:LongtermInvestmentsMemberdlb:LongtermInvestmentsMember2020-12-250001308547dlb:LongtermInvestmentsMemberdlb:LongtermInvestmentsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel1Memberdlb:LongtermInvestmentsMember2020-12-250001308547us-gaap:FairValueInputsLevel2Memberdlb:LongtermInvestmentsMember2020-12-250001308547us-gaap:FairValueInputsLevel1Memberdlb:InvestmentsHeldInSupplementalRetirementPlanMember2020-12-250001308547us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:OtherCurrentAssetsMember2020-12-250001308547us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:OtherCurrentAssetsMember2020-09-262020-12-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:OtherCurrentAssetsMember2020-12-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:OtherCurrentAssetsMember2020-12-250001308547us-gaap:OtherCurrentAssetsMemberus-gaap:FairValueInputsLevel3Member2020-12-250001308547us-gaap:OtherLongTermInvestmentsMember2020-12-250001308547us-gaap:CashMember2020-09-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:CashMember2020-09-250001308547us-gaap:CommercialPaperMember2020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2020-09-250001308547us-gaap:MoneyMarketFundsMember2020-09-250001308547us-gaap:MoneyMarketFundsMember2020-09-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:MoneyMarketFundsMember2020-09-250001308547us-gaap:USTreasuryAndGovernmentMember2020-09-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMember2020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMember2020-09-250001308547us-gaap:FairValueInputsLevel1Member2020-09-250001308547us-gaap:FairValueInputsLevel2Member2020-09-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:CertificatesOfDepositMember2020-09-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:CertificatesOfDepositMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:CertificatesOfDepositMember2020-09-250001308547us-gaap:AgencySecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesShorttermDebtSecuritiesMember2019-09-282020-09-250001308547us-gaap:USGovernmentAgenciesShorttermDebtSecuritiesMember2020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:USGovernmentAgenciesShorttermDebtSecuritiesMember2020-09-250001308547us-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMemberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMemberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:CorporateDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:CorporateDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:MunicipalBondsMember2020-09-250001308547us-gaap:ShortTermInvestmentsMemberus-gaap:MunicipalBondsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMemberus-gaap:MunicipalBondsMember2020-09-250001308547us-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:ShortTermInvestmentsMember2019-09-282020-09-250001308547us-gaap:ShortTermInvestmentsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2020-09-250001308547us-gaap:AgencySecuritiesMemberdlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:AgencySecuritiesMemberdlb:LongtermInvestmentsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:AgencySecuritiesMember2020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:AgencySecuritiesMemberdlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:USTreasuryAndGovernmentMemberdlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:USTreasuryAndGovernmentMemberdlb:LongtermInvestmentsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasuryAndGovernmentMemberdlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:USTreasuryAndGovernmentMemberdlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:CorporateDebtSecuritiesMemberdlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:CorporateDebtSecuritiesMemberdlb:LongtermInvestmentsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMemberdlb:LongtermInvestmentsMember2020-09-250001308547dlb:LongtermInvestmentsMemberus-gaap:MunicipalBondsMember2020-09-250001308547dlb:LongtermInvestmentsMemberus-gaap:MunicipalBondsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel2Memberdlb:LongtermInvestmentsMemberus-gaap:MunicipalBondsMember2020-09-250001308547us-gaap:OtherLongTermInvestmentsMemberdlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:OtherLongTermInvestmentsMemberdlb:LongtermInvestmentsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:OtherLongTermInvestmentsMemberdlb:LongtermInvestmentsMember2020-09-250001308547dlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:FairValueInputsLevel1Memberdlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:FairValueInputsLevel2Memberdlb:LongtermInvestmentsMember2020-09-250001308547us-gaap:FairValueInputsLevel1Memberdlb:InvestmentsHeldInSupplementalRetirementPlanMember2020-09-250001308547us-gaap:DerivativeFinancialInstrumentsAssetsMember2020-09-250001308547us-gaap:DerivativeFinancialInstrumentsAssetsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel3Member2020-09-250001308547us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:OtherNoncurrentAssetsMember2020-09-250001308547us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:OtherNoncurrentAssetsMember2019-09-282020-09-250001308547us-gaap:FairValueInputsLevel1Memberus-gaap:OtherNoncurrentAssetsMember2020-09-250001308547us-gaap:FairValueInputsLevel2Memberus-gaap:OtherNoncurrentAssetsMember2020-09-250001308547us-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueInputsLevel3Member2020-09-250001308547us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2020-09-250001308547us-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-09-282020-09-250001308547us-gaap:OtherLongTermInvestmentsMember2020-09-250001308547us-gaap:USTreasuryAndGovernmentMember2020-12-250001308547us-gaap:CorporateDebtSecuritiesMember2020-12-250001308547us-gaap:CorporateDebtSecuritiesMember2020-09-250001308547us-gaap:MunicipalBondsMember2020-12-250001308547us-gaap:MunicipalBondsMember2020-09-250001308547us-gaap:LandMember2020-12-250001308547us-gaap:LandMember2020-09-250001308547us-gaap:BuildingMember2020-12-250001308547us-gaap:BuildingMember2020-09-250001308547us-gaap:LeaseholdImprovementsMember2020-12-250001308547us-gaap:LeaseholdImprovementsMember2020-09-250001308547us-gaap:MachineryAndEquipmentMember2020-12-250001308547us-gaap:MachineryAndEquipmentMember2020-09-250001308547dlb:ComputerSystemsandSoftwareMember2020-12-250001308547dlb:ComputerSystemsandSoftwareMember2020-09-250001308547us-gaap:FurnitureAndFixturesMember2020-12-250001308547us-gaap:FurnitureAndFixturesMember2020-09-250001308547us-gaap:EquipmentLeasedToOtherPartyMember2020-12-250001308547us-gaap:EquipmentLeasedToOtherPartyMember2020-09-250001308547us-gaap:ConstructionInProgressMember2020-12-250001308547us-gaap:ConstructionInProgressMember2020-09-250001308547srt:MinimumMember2020-12-250001308547srt:MaximumMember2020-12-250001308547dlb:AcquiredPatentsAndTechnologyMember2020-12-250001308547dlb:AcquiredPatentsAndTechnologyMember2020-09-250001308547us-gaap:CustomerRelationshipsMember2020-12-250001308547us-gaap:CustomerRelationshipsMember2020-09-250001308547us-gaap:OtherIntangibleAssetsMember2020-12-250001308547us-gaap:OtherIntangibleAssetsMember2020-09-250001308547dlb:TwoThousandFiveStockPlanMemberus-gaap:CommonClassAMember2020-12-250001308547dlb:AwardsGrantedUnderTwoThousandFiveStockPlanPriorToFebruaryTwoThousandElevenMember2020-09-262020-12-250001308547dlb:AwardsGrantedUnderTwoThousandFiveStockPlanFromFebruaryTwoThousandElevenMember2020-09-262020-12-250001308547us-gaap:EmployeeStockOptionMemberdlb:OptionsGrantedAfterJuneTwoThousandEightMemberMember2020-09-262020-12-250001308547us-gaap:EmployeeStockOptionMemberus-gaap:ShareBasedCompensationAwardTrancheOneMemberdlb:OptionsGrantedFromJuneTwoThousandEightMember2020-09-262020-12-250001308547us-gaap:EmployeeStockOptionMemberdlb:OptionsGrantedFromJuneTwoThousandEightMemberus-gaap:ShareBasedCompensationAwardTrancheTwoMember2020-09-262020-12-250001308547srt:MaximumMemberus-gaap:EmployeeStockOptionMemberdlb:OptionsGrantedFromJuneTwoThousandEightMember2020-09-262020-12-250001308547srt:MinimumMemberus-gaap:EmployeeStockOptionMemberdlb:OptionsGrantedFromJuneTwoThousandEightMember2020-09-262020-12-250001308547dlb:PerformanceBasedStockOptionsMember2020-09-262020-12-250001308547dlb:PerformanceBasedStockOptionsMembersrt:MinimumMember2020-09-262020-12-250001308547srt:MaximumMemberdlb:PerformanceBasedStockOptionsMember2020-09-262020-12-250001308547dlb:PerformanceBasedStockOptionsMembersrt:ExecutiveOfficerMemberdlb:AwardedFiscal2016Member2015-12-152015-12-150001308547dlb:PerformanceBasedStockOptionsMembersrt:ExecutiveOfficerMemberdlb:AwardedFiscal2016Member2015-12-150001308547dlb:PerformanceBasedStockOptionsMembersrt:ExecutiveOfficerMemberdlb:AwardedFiscal2017Member2016-12-152016-12-150001308547dlb:PerformanceBasedStockOptionsMembersrt:ExecutiveOfficerMemberdlb:AwardedFiscal2017Member2016-12-150001308547dlb:PerformanceBasedStockOptionsMembersrt:ExecutiveOfficerMemberdlb:AwardedFiscal2018MemberDomain2017-12-152017-12-150001308547dlb:PerformanceBasedStockOptionsMembersrt:ExecutiveOfficerMemberdlb:AwardedFiscal2018MemberDomain2017-12-150001308547dlb:PerformanceBasedStockOptionsMemberdlb:AwardedFiscal2019Membersrt:ExecutiveOfficerMember2018-12-152018-12-150001308547dlb:PerformanceBasedStockOptionsMemberdlb:AwardedFiscal2019Membersrt:ExecutiveOfficerMember2018-12-150001308547dlb:PerformanceBasedStockOptionsMember2020-12-250001308547dlb:PerformanceBasedStockOptionsMembersrt:ExecutiveOfficerMember2020-09-262020-12-250001308547dlb:TwoThousandFiveStockPlanMemberus-gaap:CommonClassAMember2020-09-262020-12-250001308547us-gaap:RestrictedStockUnitsRSUMemberdlb:EmployeeandOfficerMember2020-09-262020-12-250001308547us-gaap:RestrictedStockUnitsRSUMember2020-09-262020-12-250001308547us-gaap:RestrictedStockUnitsRSUMemberdlb:AwardsGrantedPriorToNovemberTwoThousandTenMemberMember2020-09-262020-12-250001308547dlb:AwardsGrantedPriortoNovember2010Memberus-gaap:RestrictedStockUnitsRSUMembersrt:DirectorMember2007-09-282010-10-310001308547dlb:AwardsGrantedAfterNovember2010AndPriorToFiscal2014MemberMemberus-gaap:RestrictedStockUnitsRSUMember2020-09-262020-12-250001308547us-gaap:RestrictedStockUnitsRSUMemberdlb:AwardsGrantedAfterNovember2010Membersrt:DirectorMember2007-09-282010-10-3100013085472007-09-282010-10-310001308547dlb:AwardsGrantedPriortoNovember2010Memberus-gaap:RestrictedStockUnitsRSUMembersrt:DirectorMember2010-11-012014-03-280001308547dlb:AwardsGrantedAfterNovember2010MemberMemberus-gaap:RestrictedStockUnitsRSUMember2020-09-262020-12-250001308547dlb:PerformanceBasedRestrictedStockUnitsMember2020-09-262020-12-250001308547srt:MinimumMemberdlb:PerformanceBasedRestrictedStockUnitsMember2020-09-262020-12-250001308547srt:MaximumMemberdlb:PerformanceBasedRestrictedStockUnitsMember2020-09-262020-12-250001308547srt:ExecutiveOfficerMemberdlb:PerformanceBasedRestrictedStockUnitsMember2020-12-150001308547srt:ExecutiveOfficerMemberdlb:PerformanceBasedRestrictedStockUnitsMember2020-12-152020-12-150001308547srt:ExecutiveOfficerMemberdlb:PerformanceBasedRestrictedStockUnitsMember2019-12-160001308547srt:ExecutiveOfficerMemberdlb:PerformanceBasedRestrictedStockUnitsMember2019-12-162019-12-160001308547dlb:EmployeeStockPurchasePlanMember2020-09-262020-12-250001308547dlb:EmployeeStockPurchasePlanMemberus-gaap:CommonClassAMember2020-09-262020-12-250001308547us-gaap:StockOptionMember2020-09-262020-12-250001308547us-gaap:StockOptionMember2019-09-282019-12-270001308547us-gaap:RestrictedStockUnitsRSUMember2019-09-282019-12-270001308547dlb:EmployeeStockPurchasePlanMember2020-09-262020-12-250001308547dlb:EmployeeStockPurchasePlanMember2019-09-282019-12-270001308547us-gaap:CostOfSalesMember2020-09-262020-12-250001308547us-gaap:CostOfSalesMember2019-09-282019-12-270001308547us-gaap:ResearchAndDevelopmentExpenseMember2020-09-262020-12-250001308547us-gaap:ResearchAndDevelopmentExpenseMember2019-09-282019-12-270001308547us-gaap:SellingAndMarketingExpenseMember2020-09-262020-12-250001308547us-gaap:SellingAndMarketingExpenseMember2019-09-282019-12-270001308547us-gaap:GeneralAndAdministrativeExpenseMember2020-09-262020-12-250001308547us-gaap:GeneralAndAdministrativeExpenseMember2019-09-282019-12-270001308547us-gaap:EmployeeStockOptionMember2020-12-250001308547us-gaap:EmployeeStockOptionMember2020-09-262020-12-250001308547us-gaap:RestrictedStockUnitsRSUMember2020-12-2500013085472009-11-300001308547dlb:AdditionalStockApprovedMember2010-07-310001308547dlb:AdditionalStockApprovedMember2011-07-310001308547dlb:AdditionalStockApprovedMember2012-02-290001308547dlb:AdditionalStockApprovedMember2014-10-310001308547dlb:AdditionalStockApprovedMember2017-01-250001308547dlb:AdditionalStockApprovedMember2018-07-250001308547dlb:AdditionalStockApprovedMember2019-07-310001308547dlb:StockRepurchasePlanMember2020-09-262020-12-250001308547dlb:StockRepurchasePlanMember2020-12-250001308547us-gaap:SubsequentEventMember2021-01-282021-01-280001308547us-gaap:SubsequentEventMember2021-02-192021-02-190001308547us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-09-250001308547us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-09-250001308547us-gaap:AccumulatedTranslationAdjustmentMember2020-09-250001308547us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-09-262020-12-250001308547us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-09-262020-12-250001308547us-gaap:AccumulatedTranslationAdjustmentMember2020-09-262020-12-250001308547us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-12-250001308547us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-250001308547us-gaap:AccumulatedTranslationAdjustmentMember2020-12-250001308547us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-09-270001308547us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-09-270001308547us-gaap:AccumulatedTranslationAdjustmentMember2019-09-270001308547us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-09-282019-12-270001308547us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-09-282019-12-270001308547us-gaap:AccumulatedTranslationAdjustmentMember2019-09-282019-12-270001308547us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2019-12-270001308547us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2019-12-270001308547us-gaap:AccumulatedTranslationAdjustmentMember2019-12-270001308547us-gaap:EmployeeStockOptionMember2020-09-262020-12-250001308547us-gaap:EmployeeStockOptionMember2019-09-282019-12-270001308547us-gaap:RestrictedStockUnitsRSUMember2020-09-262020-12-250001308547us-gaap:RestrictedStockUnitsRSUMember2019-09-282019-12-270001308547us-gaap:EmployeeStockMember2020-09-262020-12-250001308547us-gaap:EmployeeStockMember2019-09-282019-12-270001308547us-gaap:EmployeeSeveranceMember2019-09-282019-12-27dlb:employee0001308547us-gaap:EmployeeSeveranceMember2020-09-262020-12-250001308547us-gaap:EmployeeSeveranceMember2019-09-270001308547us-gaap:FacilityClosingMember2019-09-270001308547us-gaap:EmployeeSeveranceMember2019-09-282020-09-250001308547us-gaap:FacilityClosingMember2019-09-282020-09-250001308547us-gaap:EmployeeSeveranceMember2020-09-250001308547us-gaap:FacilityClosingMember2020-09-250001308547us-gaap:FacilityClosingMember2020-09-262020-12-250001308547us-gaap:EmployeeSeveranceMember2020-12-250001308547us-gaap:FacilityClosingMember2020-12-250001308547dlb:NamingRightsMember2020-09-262020-12-250001308547dlb:DonationCommitmentsMember2020-09-262020-12-25
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 25, 2020
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From              To             
Commission File Number: 001-32431

dlb-20201225_g1.jpg
DOLBY LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Delaware90-0199783
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1275 Market StreetSan FranciscoCalifornia94103-1410
(Address of principal executive offices)(Zip Code)

(415) 558-0200
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.001 par valueDLBThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer☒
Accelerated Filer  
☐
Non-accelerated Filer  
☐
Smaller Reporting Company  
☐
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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No ☒
On January 22, 2021, the registrant had 65,485,684 shares of Class A common stock, par value $0.001 per share, and 36,127,279 shares of Class B common stock, par value $0.001 per share, outstanding.

Table of Contents

DOLBY LABORATORIES, INC.
FORM 10-Q
For the Fiscal Quarter Ended December 25, 2020
TABLE OF CONTENTS
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

2
Table of Contents

GLOSSARY OF TERMS
The following table summarizes certain terms and abbreviations that may be used within the text of this report:
AbbreviationTerm
AACAdvanced Audio Coding
AFSAvailable-For-Sale (Securities)
AOCIAccumulated Other Comprehensive Income
ASCAccounting Standards Codification
ASPAverage Selling Price
ASUAccounting Standards Update
ATSCAdvanced Television Systems Committee
AVCAdvanced Video Coding
AVRAudio/Video Receiver
CEConsumer Electronics
CESConsumer Electronics Show
CODMChief Operating Decision Maker
COGSCost Of Goods Sold
COSOCommittee Of Sponsoring Organizations (Of The Treadway Commission)
DDDolby Digital®
DD+Dolby Digital Plus™
DMADigital Media Adapter
DTVDigital Television
DVBDigital Video Broadcasting
DVDDigital Versatile Disc
EPSEarnings Per Share
ESPEstimated Selling Price
ESPPEmployee Stock Purchase Plan
FASBFinancial Accounting Standards Board
FCPAForeign Corrupt Practices Act
G&AGeneral and Administrative
HDHigh Definition
HDRHigh-Dynamic Range
HDTVHigh Definition Television
HE-AACHigh Efficiency Advanced Audio Coding
HEVCHigh Efficiency Video Coding
HTIBHome Theater In-A-Box
ICIntegrated Circuit
IBRIncremental Borrowing Rate
IPIntellectual Property
ITInformation Technology
LPLimited Partner/Partnership
NOLNet Operating Loss
OECDOrganization For Economic Co-Operation & Development
OEMOriginal Equipment Manufacturer
OTTOver-The-Top
PCPersonal Computer
PCSPost-Contract Support
PP&EProperty, Plant, and Equipment
PSOPerformance-Based Stock Option
PSUPerformance-Based Restricted Stock Unit
R&DResearch and Development
ROURight-Of-Use
RSURestricted Stock Unit
S&MSales and Marketing
SECU.S. Securities and Exchange Commission
SERPSupplemental Executive Retirement Plan
STBSet-Top Box
TSRTotal Stockholder Return
UHDUltra High Definition
U.S. GAAPGenerally Accepted Accounting Principles In The United States

3
Table of Contents

PART I - FINANCIAL INFORMATION
ITEM 1. UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(unaudited)

December 25,
2020		September 25,
2020
ASSETS
Current assets:
Cash and cash equivalents$1,110,024 $1,071,876 
Restricted cash9,401 8,103 
Short-term investments52,261 46,948 
Accounts receivable, net of allowance for credit losses of $12,624 and $15,908
293,948 180,340 
Contract assets, net of allowance for credit losses of $215 and $0
187,539 161,357 
Inventories, net20,108 25,550 
Prepaid expenses and other current assets51,390 53,022 
Total current assets1,724,671 1,547,196 
Long-term investments49,337 52,149 
Property, plant, and equipment, net543,550 541,963 
Operating lease right-of-use assets75,460 76,515 
Intangible assets, net144,688 152,431 
Goodwill338,713 336,945 
Deferred taxes133,610 118,881 
Other non-current assets86,825 91,245 
Total assets$3,096,854 $2,917,325 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$13,631 $12,617 
Accrued liabilities250,253 219,974 
Income taxes payable15,516 3,260 
Contract liabilities 21,202 15,436 
Operating lease liabilities15,817 15,822 
Total current liabilities316,419 267,109 
Non-current contract liabilities23,766 24,342 
Non-current operating lease liabilities64,256 65,315 
Other non-current liabilities121,196 122,154 
Total liabilities525,637 478,920 
Stockholders’ equity:
Class A, $0.001 par value, one vote per share, 500,000,000 shares authorized: 65,463,823 shares issued and outstanding at December 25, 2020 and 64,167,725 at September 25, 2020
59 58 
Class B, $0.001 par value, ten votes per share, 500,000,000 shares authorized: 36,127,720 shares issued and outstanding at December 25, 2020 and 36,128,720 at September 25, 2020
41 41 
Retained earnings2,565,670 2,443,138 
Accumulated other comprehensive (loss)(608)(10,594)
Total stockholders’ equity – Dolby Laboratories, Inc.2,565,162 2,432,643 
Controlling interest6,055 5,762 
Total stockholders’ equity2,571,217 2,438,405 
Total liabilities and stockholders’ equity$3,096,854 $2,917,325 
See accompanying notes to unaudited interim condensed consolidated financial statements
4
Table of Contents

DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
Fiscal Quarter Ended
December 25,
2020		December 27,
2019
Revenue:
Licensing$373,005 $257,683 
Products and services16,869 34,194 
Total revenue389,874 291,877 
Cost of revenue:
Cost of licensing12,946 12,342 
Cost of products and services22,358 24,973 
Total cost of revenue35,304 37,315 
Gross margin354,570 254,562 
Operating expenses:
Research and development63,772 57,650 
Sales and marketing75,445 95,118 
General and administrative54,454 52,529 
Gain on sale of assets(13,871)— 
Restructuring charges10,023 675 
Total operating expenses189,823 205,972 
Operating income164,747 48,590 
Other income/expense:
Interest income974 4,932 
Interest expense(85)(72)
Other income, net1,326 1,004 
Total other income2,215 5,864 
Income before income taxes166,962 54,454 
Provision for income taxes(24,272)(5,863)
Net income including controlling interest142,690 48,591 
Less: net (income)/loss attributable to controlling interest(7,492)162 
Net income attributable to Dolby Laboratories, Inc.$135,198 $48,753 
Net income per share:
Basic$1.34 $0.49 
Diluted$1.30 $0.47 
Weighted-average shares outstanding:
Basic100,716 100,336 
Diluted103,876 103,078 
Related party rent expense:
Included in operating expenses$16 $70 
Included in net income attributable to controlling interest$119 $(106)
Cash dividend declared per common share$0.22 $0.22 
Cash dividend paid per common share$0.22 $0.22 
See accompanying notes to unaudited interim condensed consolidated financial statements
5
Table of Contents

DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)

 Fiscal Quarter Ended
 December 25,
2020		December 27,
2019
Net income including controlling interest$142,690 $48,591 
Other comprehensive income:
Currency translation adjustments, net of tax of ($472) and $40
8,168 3,620 
Unrealized loss on investments, net of tax of $2 and ($261)
(165)(1,162)
Unrealized gain on cash flow hedges, net of tax of ($290) and ($37)
2,146 284 
Total other comprehensive income, net of tax10,149 2,742 
Total comprehensive income152,839 51,333 
Less: comprehensive income attributable to controlling interest(7,655)(15)
Comprehensive income attributable to Dolby Laboratories, Inc.$145,184 $51,318 
See accompanying notes to unaudited interim condensed consolidated financial statements
6
Table of Contents

DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)

 Dolby Laboratories, Inc.  
 Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income/(Loss)		Total Stockholders' Equity - Dolby
Laboratories,
Inc.		Controlling
Interest		Total Stockholders' Equity
Balance at September 25, 2020$99 $— $2,443,138 $(10,594)$2,432,643 $5,762 $2,438,405 
Net income— — 135,198 — 135,198 7,492 142,690 
Other comprehensive income, net of tax— — — 9,986 9,986 163 10,149 
Distributions to controlling interest— — — — — (7,362)(7,362)
Stock-based compensation expense— 26,313 — — 26,313 — 26,313 
Repurchase of common stock— (49,550)9,565 — (39,985)— (39,985)
Cash dividends declared and paid on common stock— — (22,231)— (22,231)— (22,231)
Common stock issued under employee stock plans2 51,321 — — 51,323 — 51,323 
Tax withholdings on vesting of restricted stock(1)(28,084)— — (28,085)— (28,085)
Balance at December 25, 2020$100 $— $2,565,670 $(608)$2,565,162 $6,055 $2,571,217 


 Dolby Laboratories, Inc.  
 Common
Stock		Additional
Paid-In
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income/(Loss)		Total Stockholders' Equity - Dolby
Laboratories,
Inc.		Controlling
Interest		Total Stockholders' Equity
Balance at September 27, 2019$99 $— $2,327,877 $(20,625)$2,307,351 $5,679 $2,313,030 
Net income— — 48,753 — 48,753 (162)48,591 
Other comprehensive income, net of tax— — — 2,565 2,565 177 2,742 
Distributions to controlling interest— — — — — (283)(283)
Stock-based compensation expense— 22,614 — — 22,614 — 22,614 
Repurchase of common stock— (26,705)(3,298)— (30,003)— (30,003)
Cash dividends declared and paid on common stock— — (22,081)— (22,081)— (22,081)
Common stock issued under employee stock plans— 24,373 — — 24,373 — 24,373 
Tax withholdings on vesting of restricted stock— (20,282)— — (20,282)— (20,282)
Balance at December 27, 2019$99 $— $2,351,251 $(18,060)$2,333,290 $5,411 $2,338,701 

See accompanying notes to unaudited interim condensed consolidated financial statements
7
Table of Contents

DOLBY LABORATORIES, INC.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 Fiscal Quarter Ended
 December 25,
2020		December 27,
2019
Operating activities:
Net income including controlling interest$142,690 $48,591 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization22,168 20,239 
Stock-based compensation26,313 22,614 
Amortization of premium on investments329 160 
Provision/(benefit) for credit losses(1,367)575 
Deferred income taxes(15,439)(9,174)
Gain on sale of assets(13,871)— 
Restructuring charges8,125 486 
Other non-cash items affecting net income1,276 (10)
Changes in operating assets and liabilities:
Accounts receivable, net(111,902)(2,331)
Contract assets(26,384)(9,310)
Inventories4,424 767 
Operating lease right-of-use assets3,350 (8,644)
Prepaid expenses and other assets6,397 (13,245)
Accounts payable and accrued liabilities22,272 (30,785)
Income taxes, net13,984 945 
Contract liabilities5,153 (724)
Operating lease liabilities(3,481)8,664 
Other non-current liabilities(1,877)2,341 
Net cash provided by operating activities82,160 31,159 
Investing activities:
Purchases of investment securities(13,726)(129,325)
Proceeds from sales of investment securities1,854 97,717 
Proceeds from maturities of investment securities9,535 17,876 
Purchases of property, plant, and equipment(15,527)(23,385)
Proceeds from sale of assets16,365 — 
Purchase of intangible assets— (290)
Net cash used in investing activities(1,499)(37,407)
Financing activities:
Proceeds from issuance of common stock51,323 24,373 
Repurchase of common stock(39,985)(30,003)
Payment of cash dividend(22,231)(22,081)
Distribution to controlling interest(7,362)(283)
Shares repurchased for tax withholdings on vesting of restricted stock(28,085)(20,282)
Net cash used in financing activities(46,340)(48,276)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash5,125 2,086 
Net increase/(decrease) in cash, cash equivalents, and restricted cash39,446 (52,438)
Cash, cash equivalents, and restricted cash at beginning of period1,079,979 805,593 
Cash, cash equivalents, and restricted cash at end of period$1,119,425 $753,155 
Supplemental disclosure:
Cash paid for income taxes, net of refunds received$14,952 $17,999 
Non-cash investing activities:
Change in property, plant, and equipment purchased, unpaid at period-end$(1,446)$(582)
Purchase consideration payable for intangibles $— $2,610 
See accompanying notes to unaudited interim condensed consolidated financial statements
8
Table of Contents

DOLBY LABORATORIES, INC.
NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation
Unaudited Interim Condensed Consolidated Financial Statements
We have prepared the accompanying unaudited interim condensed consolidated financial statements in accordance with U.S. GAAP, and with SEC rules and regulations, which allow for certain information and footnote disclosures that are normally included in annual financial statements prepared in accordance with U.S. GAAP to be condensed or omitted. In our opinion, these unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements for the fiscal year ended September 25, 2020 and include all adjustments necessary for fair presentation. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with our consolidated financial statements for the fiscal year ended September 25, 2020, which are included in our Annual Report on Form 10-K filed with the SEC.
The results for the fiscal quarter ended December 25, 2020 are not necessarily indicative of the results to be expected for any subsequent quarterly or annual financial period, including the fiscal year ending September 24, 2021.
Principles of Consolidation
The unaudited interim condensed consolidated financial statements include the accounts of Dolby Laboratories, Inc. and our wholly owned subsidiaries. In addition, we have consolidated the financial results of jointly owned affiliated companies in which our principal stockholder has a controlling interest. We report these controlling interests as a separate line in our condensed consolidated statements of operations as net income attributable to controlling interest and in our condensed consolidated balance sheets as a controlling interest. We eliminate all intercompany accounts and transactions upon consolidation.
Operating Segments
Since we operate as a single reportable segment, all required financial segment information is included in our unaudited interim condensed consolidated financial statements. This reflects the fact that our CODM, our Chief Executive Officer, evaluates our financial information and resources, and assesses the performance of these resources on a consolidated basis.
Use of Estimates
The preparation of our financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported and disclosed in our unaudited interim condensed consolidated financial statements and accompanying notes.
Significant items subject to such estimates and assumptions include estimated shipments by our licensees for which we are owed a sales–based royalty. These estimates involve the use of historical data and judgment for several key attributes including industry estimates of expected shipments, the percentage of markets using our technologies, and average sale prices. Our estimates of royalty-based revenue also take into consideration the macroeconomic effect of global events, such as the coronavirus pandemic ("COVID-19") or other natural disasters which may impact our licensees' supply chain activities as well as demand for shipments.
Additional significant items subject to such estimates and assumptions include ESPs for performance obligations within revenue arrangements; valuation allowances for accounts receivable; carrying values of inventories and certain property, plant, and equipment, goodwill and intangible assets; fair values of investments; accrued liabilities including liabilities for unrecognized tax benefits, deferred income tax assets and liabilities, and stock-based compensation. Actual results could differ from our estimates.
Fiscal Year
Our fiscal year is a 52 or 53 week period ending on the last Friday in September. The fiscal periods presented herein include the 13 week periods ended December 25, 2020 and December 27, 2019. Our fiscal year ending
9
Table of Contents

September 24, 2021 (fiscal 2021) and our fiscal year ended September 25, 2020 (fiscal 2020) both consist of 52 weeks.

2. Summary of Significant Accounting Policies
Recently Issued Accounting Standards
Adopted Standards
Collaborative Arrangements. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which clarifies that certain transactions between participants in a collaborative arrangement should be accounted for under ASC 606 when the counterparty is a customer. In addition, ASU 2018-18 precludes an entity from presenting consideration from a transaction in a collaborative arrangement as revenue from contracts with customers if the counterparty is not a customer for that transaction. We adopted this standard in the first quarter of fiscal 2021 and it did not have a material impact on our condensed consolidated financial statements.
Financial Instruments. In June 2016, the FASB issued ASU 2016-13, Financial Instruments (Topic 326): Measurement of Credit Losses on Financial Instruments, which modifies the measurement of expected credit losses of certain financial instruments, including trade receivables, contract assets, and lease receivables. The standard provides guidance regarding methodologies and disclosures for expected credit losses on financial instruments, resulting in immediate recognition of estimated credit losses over the remaining life of financial assets at initiation or purchase date. We adopted this standard in the first quarter of fiscal 2021, using the modified retrospective method. The adoption of this standard did not have a material impact on our condensed consolidated financial statements.
Standards Not Yet Adopted
Income Taxes. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which modifies and eliminates certain exceptions to the general principles of ASC 740, Income Taxes. This standard will be effective for Dolby beginning September 25, 2021. We are currently evaluating the impact of the standard on our condensed consolidated financial statements.


Table of Contents

3. Revenue Recognition
We enter into revenue arrangements with our customers to license technologies, trademarks and patents for sound, imaging and voice solutions, and to sell products and services. We recognize revenue when we satisfy a performance obligation by transferring control over the use of a license, product, or service to a customer.
A. Identification of the Contract or Contracts with Customers
We generally determine that a contract with a customer exists upon the execution of an agreement and after consideration of collectability, which could include an evaluation of the customer's payment history, the existence of a standby letter-of-credit between the customer’s financial institution and our financial institution, public financial information, and other factors. At contract inception, we also evaluate whether two or more non-standard agreements with a customer should be combined and accounted for as a single contract.
B. Identification of Performance Obligations in a Contract
We generate revenues principally from the following sources, which represent performance obligations in our contracts with customers:
•Licensing.   We license our technologies, including patents, to a range of customers who incorporate them into their products for enhanced audio, imaging and voice functionality across broadcast, mobile, CE, PC, gaming, and other markets.
•Product Sales. We design and provide audio and imaging products for the cinema, television, broadcast, communications, and entertainment industries.
•Services.  We provide various services to support theatrical and television production for cinema exhibition, broadcast, and home entertainment, including equipment training, mixing room alignment, equalization, as well as audio, color and light image calibration.
•PCS. We provide PCS for products sold and for equipment leased, and we support the implementation of our licensing technologies in our licensees’ products.
•Equipment Leases. We collaborate with established cinema exhibitors to offer Dolby Cinema, a branded premium cinema offering for movie audiences by leasing equipment and licensing our intellectual property. We also lease hardware that facilitates the Dolby conferencing experience, including the Dolby Conference Phone, and the Dolby Voice Room solution.
•Licensing Administration Fees. We generate service fees for managing patent pools on behalf of third party patent owners through our wholly-owned subsidiary, Via Licensing Corporation.
Some of our revenue arrangements include multiple performance obligations, such as hardware, software, support and maintenance, and extended warranty services. We evaluate whether promised products and services are distinct performance obligations.
The majority of our arrangements with multiple performance obligations pertain to our digital cinema server and processor sales that include the following distinct performance obligations to which we allocate portions of the transaction price based on their stand-alone selling price:
•Digital cinema server hardware and embedded software, which is highly dependent on and highly interrelated with the hardware. Accordingly, the hardware and embedded software represent a single performance obligation.
•The right to support and maintenance, which is included with the purchase of the digital cinema server hardware, is a distinct performance obligation.
•The right to receive commissioning services is a distinct performance obligation within the sale of the Dolby Atmos Cinema Processor. These services consist of the review of venue designs specifying proposed speaker placement as well as calibration services performed for installed speakers to ensure optimal playback.
C. Determination of Transaction Price for Performance Obligations in a Contract
After identifying the distinct performance obligations, we determine the transaction price in accordance with the
11
Table of Contents

terms of the underlying executed contract which may include variable consideration such as discounts, rebates, refunds, rights of returns, and incentives. We assess and update, if necessary, the amount of variable consideration to which we are entitled for each reporting period. At the end of each reporting period, we estimate and accrue a liability for returns and adjustments as a reduction to revenue based on several factors, including past returns history.
With the exception of our sales-based royalties, we evaluate whether a significant financing component exists when we recognize revenue in advance of customer payments that occur over time. For example, some of our licensing arrangements include payment terms greater than one year from when we transfer control of our IP to a licensee and the receipt of the final payment for that IP. If a significant financing component exists, we classify a portion of the transaction price as interest income, instead of recognizing all of the transaction price as revenue. We do not adjust the transaction price for the effects of financing if, at contract inception, the period between the transfer of control to a customer and final payment is expected to be one year or less.
D. Allocation of Transaction Price to Distinct Performance Obligations in a Contract
For our sales-based royalties where the license is the predominant item to which the royalties relate, we present all revenues as licensing.
For revenue arrangements that include multiple performance obligations, we determine the stand-alone selling price for each distinct performance obligation based on the actual selling prices made to customers. If the performance obligation is not sold separately, we estimate the stand-alone selling price. We do so by considering market conditions such as competitor pricing strategies, customer specific information and industry technology lifecycles, internal conditions such as cost and pricing practices, or applying the residual approach method when the selling price of the good, most commonly a license, is highly variable or uncertain.
Once the transaction price - including any variable consideration - has been determined, we allocate the transaction price to the performance obligations identified in the contract, and recognize revenue as or when control is transferred for each distinct performance obligation.
E. Revenue Recognition as Control is Transferred to a Customer
We generate our licensing revenue by licensing our technologies and patents to various types of licensees, such as chip manufacturers ("implementation licensees"), consumer product manufacturers, software vendors, and communications service providers. Our revenue recognition policies for each of these arrangements are summarized below.
Initial fees from implementation licensees. Implementation licensees incorporate our technologies into their chipsets that, once approved by Dolby, are available for purchase by OEMs for use in end-user products. Implementation licensees only pay us a nominal initial fee on contract execution as consideration for the ongoing services that we provide to assist in their implementation process. Revenues from these initial fees are recognized ratably over the contractual term as a component of licensing revenue.
Sales-based licensing fees. In our royalty bearing licensing agreements with OEMs, control is transferred upon the later of contract execution or the contract’s effective date. We apply the royalty exception, which requires that we recognize sales-based royalties when the sales occur based on our estimates. These estimates involve the use of historical data and judgment for several key attributes including industry estimates of expected shipments, the percentage of markets using our technologies, and average sale prices. Generally, our estimates represent the current period’s shipments to which we expect our licensees to submit royalty statements in the following quarter. Upon receipt of royalty statements from the licensees with the actual reporting of sales-based royalties that we estimated previously, we record a favorable or unfavorable adjustment based on the difference, if any, between estimated and actual sales. In the first quarter of fiscal 2021, we recorded a favorable adjustment of approximately $21 million, which was primarily related to July through September shipments and largely based on actual royalty statements received from licensees.
Fixed and guaranteed licensing fees.   In certain cases, our arrangements require the licensee to pay fixed, non-refundable fees. In these cases, control is transferred and fees are recognized upon the later of contract execution or the effective date. Additionally and separate from initial fees from implementation licensees, our sales- and usage-based licensing agreements include a nominal fee, which is also recognized at a point in time in which control of the IP has been transferred. Revenues from these arrangements are included as a component of licensing revenue.
12
Table of Contents

Recoveries.  Through compliance efforts, we identify misreported licensed activity related to non-current periods. We may record a favorable or unfavorable revenue adjustment in connection with the findings from these compliance efforts generally upon resolution with the licensee through agreement of the findings, or upon receipt of the licensee’s correction statement. Revenues from these arrangements are included as a component of licensing revenue.
We undertake activities aimed at identifying potential unauthorized uses of our technologies, which when successful result in the recognition of revenue. Recoveries stem from third parties who agree to remit payments to us based on past use of our technology. In these scenarios, a legally binding contract did not exist at time of use of our technology, and therefore, we recognize revenue recoveries upon execution of the agreement as that is the point in time to which a contract exists and control is transferred. These revenues are classified as licensing revenue.
In general, we classify legal costs associated with activities aimed at identifying potential unauthorized uses of our technologies, auditing existing licensees, and on occasion, pursuing litigation as S&M in our condensed consolidated statements of operations.
We recognize licensing revenue gross of withholding taxes, which our licensees remit directly to their local tax authorities, and for which we receive a partial foreign tax credit in our income tax provision.
In addition to our licensing arrangements, we also enter into arrangements to deliver products and services.
Product Sales.   Revenue from the sale of products is recognized when the customer obtains control of the promised good or service, which is generally upon shipment. Payments are generally made within 90 days of sale.
Services.  We provide various services, such as engineering services related to movie soundtrack print mastering, equipment training and maintenance, mixing room alignment, equalization, and image calibration, which we bill on a fixed fee and time and materials basis. Most of these services are of a short duration and are recognized as control of the performance obligations are transferred which is when the related services are performed.
Collaborative Arrangements.   We collaborate with established cinema exhibitors to offer Dolby Cinema, a branded premium cinema offering for movie audiences. Under such collaborations, Dolby and the exhibitor are both active participants, and share the risks and rewards associated with the business. Accordingly, these collaborations are governed by revenue sharing arrangements under which Dolby receives revenue based on box office receipts, reported to Dolby by exhibitor partners on a monthly or quarterly basis, our proprietary designs and trademarks as well as for the use of our equipment at the exhibitor's venue. The use of our product solution meets the definition of a lease, and for the related portion of Dolby's share of revenue, we apply ASC 842, Leases, and recognize revenue based on monthly box office reports from exhibitors. Our revenue share is recognized as licensing revenue in our condensed consolidated statements of operations.
In addition, we also enter into hybrid agreements where a portion of our revenue share involves guaranteed payments, which in some cases result in classifying the arrangement as a sales-type lease. In such arrangements, we consider control to transfer at the point in time to which we have installed and tested the equipment, at which point we record such guaranteed payments as product revenue.
Via Administration Fee. We generate service fees for managing patent pools on behalf of third party patent owners through our wholly-owned subsidiary, Via Licensing Corporation. As an agent to licensors in the patent pool, Via receives a share of the sales-based royalty that the patent pool licensors earn from licensees. As such, we apply the sales-based royalty exception as the service provided is directly related to the patent pool licensors’ provision of IP, which results in recognition based on estimates of the licensee’s quarter shipments that use the pool’s patents. In addition to sales-based royalties, Via also has contracts where the fees are fixed. The revenue share Via receives from licensors on fixed fee contracts is recognized over the term in which we are providing services associated with the fixed fee contract. We recognize our administrative fees net of the consideration paid to the patent licensors in the pool as licensing revenue.
Deferred revenue, which is a component of contract liabilities, represents amounts that are ultimately expected to be recognized as revenue, but for which we have yet to satisfy the performance obligation. On December 25, 2020, we had $43.1 million of remaining performance obligations, 38% of which we expect to recognize as revenue in fiscal 2021, 24% in fiscal 2022, and the balance of 38% in fiscal years beyond 2022.
F. Disaggregation of revenue
13
Table of Contents

The following table presents a summary of the composition of our revenue for all periods presented:
Fiscal Quarter Ended
RevenueDecember 25, 2020December 27, 2019
Licensing$373,005 96 %$257,683 88 %
Products and services16,869 4 %34,194 12 %
Total revenue$389,874 100 %$291,877 100 %
The following table presents the composition of our licensing revenue for all periods presented:
Fiscal Quarter Ended
MarketDecember 25, 2020December 27, 2019
Broadcast$139,300 37 %$102,133 40 %
Mobile105,623 28 %34,481 13 %
CE51,921 14 %48,845 19 %
PC32,735 9 %31,843 12 %
Other43,426 12 %40,381 16 %
Total licensing revenue$373,005 100 %$257,683 100 %
We license our technologies in approximately 60 countries, and our licensees distribute products that incorporate our technologies throughout the world. As shown in the table below, we generate the majority of our revenue from outside the United States. Geographic data for our licensing revenue is based on the location of our licensees’ headquarters, products revenue is based on the destination to which we ship our products, and services revenue is based on the location where services are performed.
Fiscal Quarter Ended
Revenue By Geographic LocationDecember 25, 2020December 27, 2019
United States$101,074 26 %$107,627 37 %
International288,800 74 %184,250 63 %
Total revenue$389,874 100 %$291,877 100 %
G. Contract balances
Our contract assets represent rights to consideration from licensees for the use of our IP that we have estimated in a given period in the absence of receiving actual royalty statements from licensees. These estimates reflect our best judgment at that time, and are developed using a number of inputs, including historical data, industry estimates of expected shipments, anticipated sales price and performance, and third-party data supporting the percentage of markets using our technologies. In the event that our estimates differ from actual amounts reported, we record an adjustment in the quarter in which the royalty statement is received which is typically the quarter following our estimate. Actual amounts reported are typically paid within 60 days following the end of the quarter of shipment. The main drivers for change in the contract assets account are variances in quarterly estimates, and to a lesser degree, timing of receipt of actual royalty statements.
Our contract liabilities consist of advance payments and billings in advance of performance, deferred revenue that is typically satisfied within one year, and deferred interest where we have significant financing. The non-current portion of contract liabilities is separately disclosed in our condensed consolidated balance sheets. We present the net contract asset or liability when we have both contract assets and contract liabilities for a single contract. In the first quarter of fiscal 2021, we recognized $4.5 million from prior period deferred revenue.
The following table presents a summary of the balances to which contract assets and liabilities related to revenue are recorded for all periods presented:
December 25, 2020September 25, 2020Change ($)Change (%)
Accounts receivable, net$293,948 $180,340 $113,608 63 %
Contract assets, net187,539 161,357 26,182 16 %
Contract liabilities - current21,202 15,436 5,766 37 %
Contract liabilities - non-current23,766 24,342 (576)(2)%

14
Table of Contents

4. Composition of Certain Financial Statement Captions
The following tables present detailed information from our condensed consolidated balance sheets as of December 25, 2020 and September 25, 2020 (amounts displayed in thousands, except as otherwise noted).
Accounts Receivable and Contract Assets
December 25,
2020		September 25,
2020
Trade accounts receivable$172,952 $147,618 
Accounts receivable from patent administration program licensees133,620 48,630 
Contract assets187,754 161,357 
Accounts receivable, gross and contract assets, gross494,326 357,605 
Less: allowance for credit losses(12,839)(15,908)
Total$481,487 $341,697 
Accounts receivable, gross includes unbilled accounts receivable balances of $126.8 million and $62.1 million as of December 25, 2020 and September 25, 2020, respectively, related to amounts that are contractually owed. The unbilled balance represents our unconditional right to consideration related to fixed fee contracts which we are entitled to as a result of satisfying, or partially satisfying, performance obligations, as well as Via's unconditional right to consideration related to their patent administration programs.
We maintain a provision for estimated credit losses on receivables resulting from our customers' inability to make required payments. In determining the provision, we pool receivables with similar risk characteristics to evaluate the collectability of our accounts receivable. Risk characteristics considered in creating these risk pools include assessing historical or expected loss patterns, credit ratings, current economic conditions that could impact collectability of cash flows (such as the macroeconomic effects of COVID-19), and structure of customer agreements. In cases where circumstances have changed such that specific customers no longer share similar risk characteristics, customers are excluded from their current pool and their risk profiles are evaluated separately. We recognize allowances for credit losses based on our actual historical loss information, the current business environment, and reasonable and supportable forecasts. Actual future losses from uncollectible accounts may differ from our estimates.
Allowance for Credit LossesBeginning BalanceCharges/(Credits) to G&ADeductionsEnding Balance
For fiscal year ended:
September 25, 2020$9,775 $7,689 $(1,556)$15,908 
December 25, 202015,908 (1,367)(1,702)12,839 
Inventories
December 25,
2020		September 25,
2020
Raw materials$4,691 $3,770 
Work in process8,789 9,214 
Finished goods6,628 12,566 
Total$20,108 $25,550 
Inventories are stated at the lower of cost and net realizable value. Inventory with a consumption period expected to exceed twelve months is recorded within other non-current assets in our condensed consolidated balance sheets. We have included $1.6 million and $2.6 million of raw materials inventory within other non-current assets in our balance sheets as of December 25, 2020 and September 25, 2020, respectively. Based on anticipated inventory consumption rates, and aside from existing write-downs due to excess inventory, we do not believe that material risk of obsolescence exists prior to ultimate sale.
Prepaid Expenses And Other Current Assets
December 25,
2020		September 25,
2020
Prepaid expenses$18,716 $17,884 
Other current assets32,674 35,138 
Total$51,390 $53,022 
15
Table of Contents


In fiscal year 2019, management committed to a plan to sell a property, which included land and a building. This property was previously classified as held for sale and was included in other current assets on the condensed consolidated balance sheets, with a carrying value of $2.2 million as of September 25, 2020. During the first quarter of fiscal 2021, we finalized the sale on this property, and as a result, we recognized a gain of $13.9 million, which was recorded to gain on sale of assets on the condensed consolidated statements of operations. The property was 51% owned by our controlling interest, therefore 51% of the gain recognized in gain on sale of assets has been attributed to our controlling interest.
Accrued Liabilities
December 25,
2020		September 25,
2020
Accrued royalties$1,124 $901 
Amounts payable to patent administration program partners97,985 60,427 
Accrued compensation and benefits86,219 89,684 
Accrued professional fees12,182 10,344 
Unpaid PP&E additions14,893 15,102 
Accrued customer refunds5,458 10,053 
Other accrued liabilities32,392 33,463 
Total$250,253 $219,974 
Other Non-Current Liabilities
December 25,
2020		September 25,
2020
Supplemental retirement plan obligations$4,298 $4,181 
Non-current tax liabilities (1)
87,376 85,943 
Other liabilities29,522 32,030 
Total$121,196 $122,154 
(1)    Refer to Note 12 “Income Taxes” for additional information related to tax liabilities.

16
Table of Contents

5. Investments and Fair Value Measurements
We use cash holdings to purchase investment grade securities diversified among security types, industries, and issuers. All of our investment securities are measured at fair value, and are recorded within cash equivalents and both short-term and long-term investments in our condensed consolidated balance sheets. With the exception of our mutual fund investments held in our SERP and classified as trading securities, all of our investments are classified as AFS securities. Derivative contracts are used to hedge currency risk, these are carried at fair value and classified as other assets and other liabilities.
Our investment securities primarily consist of government bonds, certificates of deposit, municipal debt securities, corporate bonds, U.S. agency securities, and commercial paper. In addition, our cash and cash equivalents also consist of highly-liquid money market funds. Consistent with our investment policy, none of our municipal debt investments are supported by letters of credit or standby purchase agreements. Our cash and investment portfolio consisted of the following (in thousands):
December 25, 2020
CostUnrealizedEstimated Fair Value
GainsLossesTotalLevel 1Level 2Level 3
Cash and cash equivalents:
Cash$976,704 $— $— $976,704 $976,704 $— $— 
Cash equivalents:
Certificate of deposit700 — — 700 — 700 — 
Money market funds132,620 — — 132,620 132,620 — — 
Cash and cash equivalents1,110,024 — — 1,110,024 1,109,324 700 — 
Short-term investments:
Certificate of deposit2,175 1 — 2,176 — 2,176 — 
U.S. agency securities1,297 11 — 1,308 — 1,308 — 
Government bonds3,905 33 — 3,938 520 3,418 — 
Commercial paper4,035 1 — 4,036 — 4,036 — 
Corporate bonds19,057 52 (5)19,104 — 19,104 — 
Municipal debt securities21,582 118 (1)21,699 — 21,699 — 
Short-term investments52,051 216 (6)52,261 520 51,741 — 
Long-term investments:
U.S. agency securities1,915 42 — 1,957 — 1,957 — 
Government bonds5,872 66 — 5,938 1,630