What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-11-18 compared with 2021-11-17 · 46 added, 61 removed, 186 unchanged (37% of the section changed)

3 unchanged sentences

Today, we derive the majority of our revenue from licensing our audio technologies.

We also derive revenue from licensing our consumer imaging and communication technologies, as well as audio and imaging technologies for premium cinema offerings in collaboration with exhibitors.

In addition, we provide products and services for a variety of applications in the cinema, broadcast, and communications markets, and offer media processing and interactivity APIs through our developer platform, Dolby.io.

We also derive revenue from licensing our consumer imaging technologies, as well as audio and imaging technologies for premium cinema offerings in collaboration with exhibitors.

In addition, we provide products and services for a variety of applications in the cinema and broadcast markets, and offer audio and video APIs through our developer platform, Dolby.io.

Please refer to the Executive Summary section of Part II, Item 7 " Management's Discussion and Analysis of Financial Condition and Results of Operations " for information concerning the continuing effect of COVID-19 on our business.

19 unchanged sentences

Total 100% 100% 100%

We generate revenue from licensing arrangements with over 500 electronics product OEM and software developer licensees.

We generate revenue from licensing arrangements with approximately 500 electronics product OEM and software developer licensees.

We license our technologies to a range of customers who incorporate them into their products for enhanced audio and imaging functionality for content playback in movies, TV, music, and gaming.

Our key technologies are summarized in the table below.

As it relates to AAC, HE-AAC, AVC, and HEVC, we jointly participate in patent licensing programs with other patent owners.

As it relates to AAC, HE-AAC, Extended HE-AAC, AVC, and HEVC, we jointly participate in patent licensing programs with other patent owners.

Technology Description

AAC & HE-AAC An advanced digital audio codec solution with higher bandwidth efficiency used for a wide range of media applications.

AAC, HE-AAC & Extended HE-AAC Advanced digital audio codec solutions with high bandwidth efficiency used for a wide range of media applications.

AVC A digital video codec with high bandwidth efficiency used in a wide range of media devices.

2 unchanged sentences

Dolby Atmos provides an immersive experience that can be provided via multiple Dolby audio coding technologies.

Dolby Digital® A digital audio coding technology that provides multichannel sound to a variety of media applications.

Dolby Digital Plus™ An advanced digital audio coding technology that offers more efficient audio transmission for a wide range of media applications and devices.

DD A digital audio coding technology that provides multichannel sound to a variety of media applications.

DD+ An advanced digital audio coding technology that offers more efficient audio transmission for a wide range of media applications and devices.

Dolby® TrueHD A digital audio coding technology providing lossless encoding for premium quality media applications.

2 unchanged sentences

HEVC A digital video codec with high bandwidth efficiency to support ultra-high definition experiences for a wide range of media devices.

The following table presents the composition of our licensing business and revenue for all periods presented:

The following table presents the composition of revenue from our licensing business for all periods presented:

Fiscal Year Ended

7 unchanged sentences

PC 13% 12% 12% Windows and macOS operating systems

Other 12% 12% 16% Gaming consoles, Auto DVD, Dolby Cinema, and Dolby Voice

Other 13% 12% 12% Gaming consoles, Auto DVD, and Dolby Cinema

Total 100% 100% 100%

We have various licensing models:

a two-tier model, an integrated licensing model, a patent licensing model, and collaboration arrangements.

a two-tier model, an integrated licensing model, a patent licensing model, recoveries, and collaboration arrangements.

Two-Tier Licensing Model .

10 unchanged sentences

These licensees incorporate our technologies in their software used on PCs, in mobile applications, or in ICs they manufacture and incorporate into their products.

As with the two-tier licensing model, the combined implementation and system licensee pays us an initial licensing fee in addition to royalties as determined by the mix of Dolby technologies used, the nature of the implementations, and the volume of products using our technologies that are shipped, and is subject to the same quality control evaluation process.

implementations, and the volume of products using our technologies that are shipped, and is subject to the same quality control evaluation process.

Patent Licensing Model.

3 unchanged sentences

By aggregating and offering pooled IP, patent pools deliver efficiencies that reduce transactional costs for both IP owners and licensees.

The Via patent pools enable product manufacturers to efficiently and transparently secure patent licenses for audio coding, interactive television, digital radio, and wireless technologies.

We offer our patents related to AAC, AVC, HE-AAC, HEVC, and other IP through a combination of patent pools and licensing directly to OEMs.

The Via patent pools enable product manufacturers to efficiently and transparently secure patent licenses for collaboratively developed technologies.

We offer our patents related to AAC, HE-AAC, Extended HE-AAC, AVC, HEVC, and other IP through a combination of patent pools and licensing directly to OEMs.

Licensing revenue recognized in any given period may include revenue from licensees and/or settlements with third parties where the use of our technology occurred in previous periods.

4 unchanged sentences

We receive revenue at Dolby Cinema sites through a share of box office receipts, which is recognized as licensing revenue.

Historically, we have entered into arrangements with audio and video conferencing providers where, in return for licensing our IP and know-how, we earned revenue based on access to our technology and services.

During the first quarter of fiscal 2021, we decided to exit our conferencing hardware business and shifted our focus towards expanding the availability of Dolby Voice technology through software solutions and services.

Products and Services

We design and manufacture audio and imaging products for the cinema, television, broadcast, and entertainment industries.

We design and manufacture audio and imaging hardware and software products for the cinema, television, broadcast, and entertainment industries.

Distributed in approximately 90 countries, these products are used in content creation, distribution, and playback to enhance image and sound quality, and improve transmission and playback.

Additionally, some of our Dolby Cinema arrangements involve fixed or minimum amounts, which are typically included in products sales.

We also sell and lease hardware that facilitates the Dolby conferencing experience, though at reduced levels since we decided to exit our conferencing hardware business in the first quarter of fiscal 2021.

Recently, we launched a developer platform, Dolby.io, that enables developers access to our technologies through APIs.

These offerings currently include media processing APIs for analyzing and improving the sound of recorded audio files, and interactivity APIs for enabling developers to embed enhanced communications experiences within their applications.

Over time, Dolby.io is intended to significantly expand the amount and types of content that can be enhanced through our technologies and capabilities.

Additionally, some of our Dolby Cinema arrangements are classified as sales-type leases, and as a result are included in products sales.

Key products from which we generate products revenue are summarized in the table below:

2 unchanged sentences

Cinema Audio Products Cinema Processors, amplifiers, and loudspeakers used to decode, render, and optimally playback digital cinema soundtracks, including those using Dolby Atmos

Other Dolby Conference Phone An integral hardware component of the Dolby Voice conferencing solution that enhances full-room voice capture, spatial voice separation, and playback.

Dolby Voice Room Video conferencing solution for huddle rooms and conference rooms that combines a camera product with the Dolby Conference Phone and Dolby Voice technology.

Other Products 3-D glasses and kits, broadcast hardware and software used to encode, transmit, and decode multiple channels of high-quality audio for DTV and HDTV distribution, monitors, accessibility solutions for hearing and visually impaired consumers, and Dolby.io.

Other Other Products 3-D glasses and kits, broadcast hardware and software used to encode, transmit, and decode multiple channels of high-quality audio for DTV and HDTV distribution, monitors, accessibility solutions for hearing and visually impaired consumers, and Dolby.io

We offer a developer platform, Dolby.io, that enables developers access to our technologies through APIs.

These offerings currently include audio and video APIs for building high-quality communications, media, and streaming solutions.

Over time, we expect to significantly expand the amount and types of content that can be enhanced through our technologies and capabilities.

In addition, we offer various services to support theatrical and television production for cinema exhibition, broadcast, and home entertainment, including equipment training and maintenance, mixing room alignment, equalization, as well as audio, color, and light image calibration.

3 unchanged sentences

As of September 30, 2022, we had approximately 16,900 issued patents and approximately 4,100 pending patent applications in more than 100 jurisdictions throughout the world.

Our currently issued patents expire at various times through September 2045.

Our currently issued patents expire at various times through December 2046.

Some of our patents relating to DD technologies have expired, and others will expire over the next several years.

19 unchanged sentences

INDUSTRY STANDARDS

Several Dolby technologies have been adopted as the explicit or de facto industry standard for broadcast, discrete media, and online delivery in various markets worldwide.

Several Dolby technologies have been adopted as, or are included in, the explicit or de facto industry standard for broadcast, discrete media, and online delivery in various markets worldwide.

Explicit industry standards are adopted through a standardization process whereby government entities, industry standards-setting bodies, trade associations, and others evaluate and then prescribe the use of a technology.

6 unchanged sentences

The transition for AC-4 continues to gain momentum, and is already being supported in a number of TVs that are available worldwide from major manufacturers.

In addition, Dolby technologies have become de facto industry standards in many consumer entertainment products.

In mobile devices, HE-AAC is specified for various applications in the 3rd Generation Partnership Project suite of standards.

• Extended HE-AAC is included in Digital Radio Mondiale radio broadcasting standards.

In addition, Dolby technologies have become, or are included in, de facto industry standards in many consumer entertainment products.

De facto industry standards are adopted by industry participants when technologies are introduced to the marketplace and become widely used, and include the following examples:

• Prior to the adoption of HD terrestrial broadcast standards mandating Dolby technologies, many European HD broadcasters began broadcasting in DD or DD+, leading OEMs to include these technologies in their televisions and STBs for the European market.

• In mobile devices, HE-AAC is specified for various applications in the 3GPP suite of standards, and is a de facto audio standard in entertainment services.

• HE-AAC is a de facto audio standard in entertainment services.

It is included in popular operating systems and widely used by major broadcasting, streaming, and radio services.

• DD+ is the de facto technology used by a wide range of pay-TV operators and streaming services worldwide and is included in popular operating systems such as iOS and Windows.

It is also widely used by major OTT services such as Apple TV+, Disney+, Netflix, and Amazon, and is included in the specifications of these services.

• Extended HE-AAC is a de facto industry standard in streaming applications.

It is included in popular operating systems and used in major OTT services.

RESEARCH AND DEVELOPMENT

5 unchanged sentences

Each of these technologies can support many offerings, and we anticipate bringing new innovations to market in the future.

R&D expenses included in our consolidated statements of operations were as follows (in thousands):

Fiscal Year Ended

September 24,

2021 September 25,

2020 September 27,

Research and Development $ 253,640 $ 239,045 $ 237,871

PRODUCT MANUFACTURING

1 unchanged sentence

Although we have some manufacturing facilities, we rely primarily upon contract manufacturers for the majority of our production capacity.

We purchase components and

fabricated parts from multiple suppliers;

We purchase components and fabricated parts from multiple suppliers;

however, we rely on sole source suppliers for certain components used to manufacture our products.

6 unchanged sentences

We maintain more than 20 sales offices in key regions around the globe.

S&M expenses included in our consolidated statements of operations were as follows (in thousands):

Fiscal Year Ended

September 24,

2021 September 25,

2020 September 27,

Sales and Marketing $ 332,671 $ 335,933 $ 343,835

We license our technologies to a broad set of customers that operate in a wide range of industries, and we sell our professional products either directly to the end user or, more commonly, through dealers and distributors.

3 unchanged sentences

In addition, some of our current or potential competitors may be able to offer integrated systems in certain markets for entertainment technologies, including audio and imaging, which could make competing technologies that we develop or acquire obsolete.

By offering an integrated system solution, these potential competitors may also be able to offer competing technologies at lower prices than we can, which could adversely affect our operating results.

By offering an integrated system solution, these potential

competitors may also be able to offer competing technologies at lower prices than we can, which could adversely affect our operating results.

Many products that include our audio and imaging technologies also include technologies developed by our competitors.

9 unchanged sentences

The regulatory enforcement activities in such jurisdictions can be unpredictable, in some cases because these jurisdictions have only recently implemented competition laws.

Our technologies, products, and services span the audio and imaging sectors of several distinct and diverse industries, including the broadcasting, mobile, consumer entertainment, PC, gaming, cinema, and communications

Our technologies, products, and services span the audio and imaging sectors of several distinct and diverse industries, including the broadcast, mobile, consumer entertainment, PC, gaming, automotive, cinema, and other industries.

The lack of a clear definition of the markets in which our products, services, and technologies are sold or licensed, the nature of our technologies, their potential use for various commercial applications, and the diverse nature of and lack of detailed reporting by our competitors, make it impracticable to quantify our position.

2 unchanged sentences

We are committed to fostering a workplace environment in which every employee can contribute their fullest potential, based on their individual experiences and perspectives, to our common efforts and make a positive impact through their roles.

Our efforts fall into three areas of ongoing engagement:

Our People, Our World, and Our Company.

Details of this work are available in our Sustainability Report, and we encourage you to read it on our website and learn more.

Nothing in our Sustainability Report shall be deemed incorporated by reference into this Annual Report on Form 10-K.

As of September 30, 2022, we had 2,336 employees worldwide, of whom 1,102 employees were based outside of the U.S.

3 unchanged sentences

We have expanded our mental well-being programs to include therapy and access to wellness coaching, mindfulness training and live community sessions.

Throughout COVID-19, we enacted business strategies to support the health and safety of our employees and enable business continuity.

We focused on implementing practices within all our offices to enable connection and effective work delivery in a full remote environment.

Dolby employees have remained highly engaged.

In a company-wide survey in September 2021, Motivation & Commitment scores indicate that we remain highly connected to our work and each other.

We are actively preparing for the future of work at Dolby which will be a blend between in person and remote work.

As the communities we operate in adopt COVID-19 measures, we continue to implement business strategies that support the health and safety of our employees and enable business continuity.

We have implemented a flex work program that enables employee connection and effective work delivery in a hybrid work environment.

In a company-wide survey in May 2022, Motivation & Commitment scores indicate that we remain highly connected to our work and each other.

Diversity, Inclusion and Belonging ("DIB")

We’re committed to being a part of creating a more equitable world.

We are committed to being a part of creating a more equitable world.

Different backgrounds, perspectives, and beliefs bring critical value to our business, and we’re driven by the knowledge that diverse talent enhances our ability to imagine, innovate, and grow.

2 unchanged sentences

This includes equipping our leaders, colleagues, and peers with tools to have open and authentic conversations with the goal of becoming more aware and more empathetic to others’ experiences.

We look at DIB comprehensively through hiring, retention, progression, and employee experiences.

We empower everyone at Dolby to be co-creators of change by offering employees opportunities to learn and grow through educational sessions, hands-on workshops, employee-led Employee Network ("EN") events, and company-led DIB programs.

Our EN community encompasses 14 networks, convening around many different dimensions of diversity including gender, race/ethnicity and more, to build community and drive awareness of issues impacting employees identifying with these dimensions of diversity and their allies.

We are accountable to our progress and publish our global gender diversity and U.S.

We hold ourselves accountable for our progress and publish our global gender diversity and U.S.

race and ethnic diversity workforce data annually.

We encourage you to review our Sustainability Report for more detailed information.

Nothing in our Sustainability Report shall be deemed incorporated by reference into this Annual Report on Form 10-K.

Compensation and Benefits

We offer competitive compensation (including salary, incentive bonus, and equity) and benefits packages in each of our locations around the globe.

In addition to comprehensive health benefits and the employee stock

purchase program, depending on the location, employees may also enjoy free or subsidized fitness programs, commuter benefits, wellness credits, tuition reimbursement opportunities, and personal development courses, among other benefits.

In addition to comprehensive health benefits and the ESPP, depending on the location, employees may also enjoy free or subsidized fitness programs, commuter benefits, wellness credits, tuition reimbursement opportunities, and personal development courses, among other benefits.

Social Impact

Through our Dolby Cares program, employees from our offices around the world organize to volunteer as individuals, as part of a work team or through our diversity, inclusion, and belonging Employee Networks.

From tutoring youth and mentoring adults reentering the workforce, to delivering meals to seniors or providing legal services through our legal pro-bono program, our employees are making our communities stronger.

Through our social impact programs, employees from our offices around the world organize to volunteer as individuals, as part of a work team or through our diversity, inclusion, and belonging employee networks.

From mentoring youth, to supporting adults re-entering the workforce, to aiding people experiencing hardships, our employees are making our communities stronger.

We also partner with educational organizations in our local communities around the world, including Bay Area Video Coalition, Girls Who Code, Greene Scholars, IGNITE Worldwide, Inneract Project, Resource Area For Teaching, University of Sydney’s Women in Engineering Program, and Fundacja Rodziny Maciejko in Poland to organize volunteer opportunities.

Our educational efforts are intended to share Dolby’s experiences, ideas and approaches from our unique position at the intersection of science, technology and art.

2 unchanged sentences

Our Board of Directors has adopted an emergency succession plan in the event of the death, disability, incapacity or unanticipated departure or leave of our Chief Executive Officer.

The organization regularly conducts talent reviews for other management roles and key positions for succession management and talent planning purposes.

Board Oversight of Human Capital Management

9 unchanged sentences

We make available on our website, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Our SEC reports can be accessed through the Investor Relations section of our website.

Our SEC reports can be accessed through the Investor Relations section of our website at www.investor.dolby.com.

The information found on our website is not part of this or any other report we file with or furnish to the SEC.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business