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Item 7. Management’s Discussion and Analysis

2024-11-19 compared with 2023-11-17 · 183 added, 181 removed, 261 unchanged (58% of the section changed)

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MACROECONOMIC CONDITIONS

The current macroeconomic environment has negatively impacted many of our licensees and that directly impacts our financial results.

Our revenue has been impacted by macroeconomic conditions, including but not limited to, elevated inflation, rising interest rates, restrictions and economic impacts related to COVID-19, supply chain constraints, increased shipping costs, international conflicts, reduced discretionary consumer spending, and reduced new product investment by our customers caused by higher interest rates and lower demand.

The current macroeconomic environment has negatively impacted many of our licensees and this directly impacts our financial results.

Our revenue has been impacted by macroeconomic conditions, including but not limited to, inflation, heightened interest rates, rising costs of material, increased shipping costs, international conflicts, labor disputes, reduced discretionary consumer spending, and reduced new product investment by our customers.

The macroeconomic conditions also impart substantial uncertainty into our operating environment, which presents additional challenges for our business.

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These conditions may impact consumer demand for devices and services and our partners’ ability to manufacture devices.

Further, we may be negatively impacted by delays in transaction cycles and our recoveries efforts due to the noted macroeconomic conditions and related uncertainty.

Further, the noted macroeconomic conditions and related uncertainty may negatively impact transaction cycles and our recovery of revenue associated with past unauthorized or unreported usage.

The future implications of these macroeconomic conditions on our business, results of operations and overall financial position remain uncertain.

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Further discussion of the potential impacts of these macroeconomic effects on our business can be found in Part I, Item 1A " Risk Factors ."

EXPANDING OUR LEADERSHIP IN AUDIO AND IMAGING EXPERIENCES

The majority of our revenue is derived from two licensing models:

Branded Technology Licensing, and Patent Licensing.

While each has had successes in fiscal 2024, they share certain challenges.

In particular, factors such as global supply constraints or device lifecycles may impact licensing revenue.

Further, in certain countries, we and other IP owners face difficulties enforcing contractual and IP rights, including instances in which our licensees fail to accurately report the shipment of products using our technologies.

Finally, we face geopolitical challenges including changes in diplomatic and trade relationships, trade protection measures, and import or export licensing requirements.

Further discussion of the potential impacts of the key challenges on our business can be found in Part I, Item 1A " Risk Factors ."

Branded Technology Licensing

Dolby’s branded technology licensing offers complete technology solutions to our licensees, primarily device manufacturers.

Licenses include rights to software, patent rights, know how, and the relevant Dolby brand .

Our branded technologies are primarily comprised of Branded Audio Codecs (DD+ and AC-4) and Dolby Atmos and Dolby Vision (Dolby Atmos for audio, and Dolby Vision for imaging).

Licensing revenue is primarily driven by the adoption of our technologies on devices and the number of devices shipped by licensees.

Our branded audio codecs have broad penetration across a diverse set of devices and end markets.

Revenue from these technologies is primarily driven by device shipments from licensees, and as such, is impacted by consumer spending The remaining portion of our branded licensing revenue is derived from Dolby Vision and Dolby Atmos.

Dolby Vision and Dolby Atmos have not been in the market as long as our branded audio codecs, thus revenue growth is driven by device shipments, increased adoption and the addition of new licensees.

We are focused on expanding our leadership in audio and imaging solutions for premium entertainment content by increasing the number of Dolby experiences that people can enjoy, which will drive revenue growth across the markets we serve.

We can increase our value proposition and create opportunities by broadening Dolby technologies into new types of content, such as music, gaming, live sports, and user-generated content.

We are increasingly making our audio and imaging technologies available for content beyond premium entertainment through Dolby.io, creating new revenue generating opportunities.

We also seek to expand the reach of our technology by incorporating it into industry standards and offering licenses to our patents covering that technology, along with our partners, through patent pools.

The following is a discussion of the key markets that we address and the various Dolby technologies and solutions that serve these markets.

The majority of our licensing revenue is derived from the licensing of audio and imaging technologies for entertainment playback.

Our branded technologies are primarily comprised of DD+, Dolby Atmos, and AC-4 for audio, and Dolby Vision for imaging.

Our audio technologies offered jointly through patent pools are incorporated into the AAC, HE-AAC, xHE-AAC, MPEG H and Opus standards for audio, and the AVC, HEVC, VVC and AV1 standards for imaging.

Licensing revenue is primarily driven by the adoption of our technologies on devices, the number of devices shipped by licensees, and by the expansion of the number of licensees adopting our technologies.

DD+, AC-4, and our AAC and HE-AAC audio patents (collectively, our "foundational audio technologies") have broad penetration across a diverse set of devices and end markets.

Our revenue from these technologies is primarily driven by device shipments from licensees, and as such, is impacted by consumer spending.

In the future, we expect revenue from our foundational audio technologies to generally reflect market trends in device shipments.

The remaining portion of our licensing revenue is derived from offerings such as Dolby Vision, Dolby Atmos, our imaging patents, and Dolby Cinema.

Dolby Vision and Dolby Atmos have not been in the market as long as our foundational audio technologies, thus revenue growth is primarily driven by increased adoption and the addition of new licensees.

technologies licensed through our patent licensing model is driven primarily by our royalty share within patent pools, licensee penetration, device shipments, and the introduction of new standardized technologies and patent programs.

Factors such as global supply constraints or device lifecycles may also impact licensing revenue generally.

Further, in certain countries, we face difficulties enforcing our contractual and IP rights, including instances in which our licensees fail to accurately report the shipment of products using our technologies.

The availability of content in Dolby formats is an important part of creating the ecosystems that drive adoption of our technologies within a wide range of devices.

Our audio and imaging technologies have a strong presence within movie and episodic content through adoption across content creators and streaming services.

The availability of content on these platforms has driven strong adoption in devices such as TVs, STBs, and speaker devices.

Our audio and imaging technologies are also widely available through many forms of distribution, including broadcast TV, streaming, and optical disc playback.

Major streaming partners and services such as Netflix, Disney+, Apple TV+, Amazon, Max, and Paramount+ continue to enhance content in Dolby Vision and Dolby Atmos.

For example, in fiscal 2023, Max launched its top tier service with Dolby Vision and Dolby Atmos.

These streaming services launch local content in Dolby formats internationally.

As we see an increase in new local content, we increase our value proposition for adoption of Dolby Vision and Dolby Atmos across devices in all market segments.

We work with industry leaders to enhance these forms of content through the use of our technologies, creating additional value for the adoption of Dolby within devices such as mobile phones and tablets, PCs, gaming consoles, and automobiles.

We have enhanced a broad range of content, such as music, gaming, live sports, and user-generated content.

In the current fiscal year:

• In music, the Belgian music festival Tomorrowland streamed its festival in Dolby Atmos, and released replay footage of the event on Apple Music in Dolby Atmos.

Apple Music launched Apple Music Classical, a new classical music app with Dolby Atmos supported on thousands of recordings, and Amazon Music, which supports Dolby Atmos, began streaming to a wider set of devices, including more wireless speakers, soundbars, and DMAs.

WYNK Music, a free music streaming service in India, has made Dolby Atmos Music available to India's Airtel's subscribers.

• In gaming, the popular mobile game PUBG Mobile was made available to play in Dolby Atmos globally.

• In sports, the 2022 FIFA World Cup was broadcast internationally by 12 global operators and three free-to-air terrestrial broadcasters in Dolby Vision and/or Dolby Atmos.

The 2023 Indian Premier League cricket matches were available in Dolby Atmos through Disney Star and JioCinema.

The 2023 French Open available for the very first time in Dolby Vision and Dolby Atmos via the streaming provider Molotov TV, and the 2023 Wimbledon Championships were broadcast in Dolby Atmos on Sky Germany.

The 68th UEFA Champions League games were available in Dolby Atmos.

The US Open Tennis Tournament was broadcast in the UK on Sky TV in Dolby Atmos.

Comcast broadcast the Superbowl LVII in Dolby Vision, and is broadcasting ESPN's college football game of the week in Dolby Vision and Dolby Atmos.

Sky Germany began broadcasting the second Bundesliga in Dolby Atmos.

Additionally, Max streamed its Major League Baseball games in Dolby Atmos.

• In user-generated content, Vivo launched its flagship mobile phone X90 Pro+ with Dolby Vision Capture and playback, further enabling the creation of user-generated content.

Weibo, one of China's largest social media platforms, began supporting Dolby Vision and Dolby Atmos.

Audiobooks on Audible now support Dolby Atmos.

Moj, India's largest short video platform, now supports Dolby Vision, and Viddsee, a short film video platform in Singapore, now supports Dolby Vision and Dolby Atmos.

The following are highlights from our fiscal 2023 and key challenges related to audio and imaging licensing, by market.

Further discussion of the potential impacts of these key challenges on our business can be found in Part I, Item 1A " Risk Factors ."

We have an established global presence with respect to our DD+ and HE-AAC audio technologies in broadcast services and devices.

We have expanded our offerings in the broadcast market through technologies such as Dolby Atmos and AC-4, Dolby Vision, as well as AVC and HEVC imaging technologies which we license through patent pools.

We work across our ecosystem of partners including creators, distributors and device manufacturers to increase the number of Dolby experiences that people can enjoy by enhancing content, including

movies and TV, music and live sports, using Dolby branded technologies.

Increased content in these areas increases our value proposition across our end markets.

In movies and TV, thousands of movie titles and tens of thousands of TV episodes have been created and released in Dolby Atmos and/or Dolby Vision.

Major streaming partners and services such as Netflix, Disney+, Apple TV+, Amazon, Max, Paramount+, and other streaming partners and services internationally, continue to enhance content in Dolby Vision and Dolby Atmos.

In Music, exiting fiscal 2024, over 90% of Billboard’s Top 100 Global artists are releasing music in Dolby Atmos, 20 music streaming services now support Dolby Atmos, and over 1,000 music studios globally have been enabled with Dolby Atmos.

In sports, the 2024 Summer Olympic Games coverage was available in Dolby Vision and Dolby Atmos, as were the T20 Cricket World Cup, UEFA EURO 2024, Wimbledon, and the NHL and NBA post season.

In India, the BGMI Master Series Grand Finals premiered in Dolby Atmos on Disney Star 4K.

Also, US streaming provider Max announced that it will stream all of its live sports content in Dolby Atmos and Dolby Vision.

In eGaming, in China, the League of Legends Summer Finals streamed live in Dolby Atmos.

Patent Licensing

Our patents are incorporated into the AAC, HE-AAC, and Extended HE-AAC standards for audio, and the AVC and HEVC standards for imaging.

The licensing of these patents forms the core of our patent licensing.

Revenue generated through our patent licensing model is driven primarily by our royalty share within patent pools, licensee penetration, device shipments, and the introduction of new standardized technologies and patent programs.

This year we, together with our patent pool partners, had success renewing existing licensees and increasing licensee penetration in established programs across multiple end markets.

For example, with respect to audio, we benefited from significant AAC renewals with Sony, Apple, Amazon and Samsung among others.

In video, new HEVC video licensees added include Nvidia, Acer, ASUS, and, in the first quarter of fiscal 2025, TCL.

We also saw traction for several of our newer programs, with new licensees added for the Opus audio program and the VP9/AV1 video program.

In fiscal 2024 we also completed the acquisition of GE Licensing, which will strengthen our position in existing programs, most notably the HEVC video program.

The GE Licensing transaction also yielded an increased ownership interest in Access Advance, a patent pool administrator.

Income from our ownership interest in Access Advance is reflected as other income in our consolidated statements of operations.

Revenue from our patent licensing depends on the adoption and use of the standardized technologies in which we participate by device manufacturers.

As in any technology licensing business, it is possible that changing partner preferences, consumer preferences, or other market dynamics could lead to adoption and use of alternative technologies.

Revenue derived from our patent licensing programs also depends on the success of the patent pools in which we participate, which is driven by licensee, licensor, and program renewals.

The revenue we derive from patent pools also depends significantly on the patent pool administrators’ success in negotiating licenses with companies already using the relevant standard (i.e.

licensee penetration).

Additionally, our revenue from patent pools is also impacted by the royalty share among pool licensors, which is determined based on the value of the patents each licensor contributes to the pool, as governed by allocation rules negotiated among the pool licensors.

The standardized technologies at the core of our patent licensing are intended for broad use across all device categories that play back audio and visual content.

OEMs typically negotiate and acquire the patent rights for these technologies for implementation across all their device categories and product lines in their applicable end markets.

Licensing End Markets

The following are highlights from our fiscal 2024 and key challenges related to Dolby’s licensing businesses, by market.

We have an established global presence and broad adoption of our branded audio and patent licensing technologies in broadcast services and devices, which primarily include TVs and STBs.

In fiscal 2024, Australia selected AC-4 as part of its new broadcast STB specification.

We work with many TV OEMs and strategic partners to enable and promote Dolby Vision and Dolby Atmos experiences within their TV lineups.

Many such partners continue to expand their support of the

combined Dolby Vision and Dolby Atmos experience.

For example, at CES in January 2023, LG announced its TV lineup that supports Dolby Vision and Dolby Atmos, and Hisense announced several new UHD TVs and Laser TVs that support Dolby Vision and Dolby Atmos.

Additionally in fiscal 2023, TCL announced new QLED and Mini-LED TVs with Dolby Vision and Dolby Atmos, and that it is expanding the number of products in its lineup that support Dolby Vision and Dolby Atmos in India.

We also recently announced that our new feature Dolby Atmos FlexConnect will be supported by TCL's 2024 TV lineup.

Acer launched TVs with DD+, Dolby Vision and Dolby Atmos in India.

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

Hoichoi, an Indian OTT, adopted Dolby Atmos and Dolby Vision.

We have strong attach rates for Dolby Atmos and Dolby Vision with high end TVs and continue to grow adoption on mid-range TVs.

We estimate that Dolby Atmos and Dolby Vision were on approximately 30% of all 4K TVs shipped during fiscal 2024,

and many partners continue to expand their support of the combined Dolby Vision and Dolby Atmos experience.

Throughout 2024, TCL and HiSense continued to adopt Dolby Vision and Dolby Atmos deeper within their TV lineups.

Additionally, Polytron, an Indonesian TV OEM, launched a new TV that supports Dolby Atmos and Dolby Vision.

Xiaomi announced new 4K QLED TVs that support Dolby Vision.

Key Challenges:

Our pursuit of new licensees and further adoption of our technologies by existing licensees may be impacted by a number of factors.

We must continue to present compelling reasons for consumers to demand our audio and imaging technologies, including ensuring that there is a breadth of available content in our formats and such content is being widely distributed.

We must continue to present compelling reasons for consumers to demand our audio and video technologies, including ensuring that there is a breadth of available content in our formats and such content is being widely distributed.

To the extent that OEMs do not incorporate our technologies in current and future products or our technology is not included in future broadcast industry standards, our revenue could be negatively impacted.

Changing trends in the way that video content is distributed and consumed may impact our business and future growth in the broadcast market, such as the trend away from subscription-based cable and satellite television providers toward streaming services.

Additionally, we face geopolitical challenges including changes in diplomatic and trade relationships, trade protection measures, and import or export licensing requirements.

We continue to focus on adoption of our technologies across major mobile ecosystems, including Apple and Android.

HE-AAC and HEVC are widely adopted audio and video technologies across mobile devices, and we offer these technologies through our patent licensing programs.

We also continue to focus on expanding adoption of our DD+, AC-4, Dolby Atmos, and Dolby Vision technologies in the mobile market.

We continue to promote adoption of our technologies across major mobile ecosystems, including Apple and Android.

Our patent licensing technologies are adopted broadly throughout the mobile device ecosystem, and we completed several important renewals this year, including with Vivo.

Dolby Atmos and Dolby Vision are included throughout the Apple device line-up and in Apple TV+, and Dolby Atmos is included in Apple Music.

Dolby Vision Capture has been supported on all iPhones since the iPhone 12 and iOS 18 recent release unlocked support for higher frame rates.

We have strong adoption of Dolby Atmos and our branded audio codecs across high-end Android mobile devices and are focused on growing our presence on low and mid-tier phones.

An increasing number of Android device manufacturers have adopted Dolby Vision and Dolby Vision Capture on high end devices and we are focused on the opportunity to significantly increase our adoption.

The breadth of mobile devices supporting Dolby technologies continues to increase globally.

In fiscal 2023, OPPO launched the OnePlus 11, its first phone that supports Dolby Vision and Dolby Atmos.

In addition, OPPO launched its first flagship phone with Dolby Vision Capture, and OnePlus launched its first phone with Dolby Vision playback and Dolby Atmos.

Xiaomi, which now has multiple Dolby Vision Capture phone models in China, began shipping Dolby Vision Capture phone models in India, Southeast Asia, Europe and the Middle East during the year.

Also in fiscal 2023, Vivo began shipping Dolby Vision Capture phones in China.

Motorola became our latest partner to announce and start shipping its first Dolby Vision playback phone globally.

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

In fiscal 2024, Transsion, a global mobile device maker, announced that their latest smartphones will support Dolby Atmos.

Xiaomi began shipping its premium smartphone enabled with Dolby Vision Capture, Dolby Vision, and Dolby Atmos in India.

Honor launched the Magic 6 Pro smartphone that supports Dolby Vision and Lava Mobiles launched its new Blaze Curve 5G smartphone in India that supports Dolby Atmos.

Oppo recently announced that they introduced five new phones supporting Dolby Vision Capture.

Also in fiscal 2024 Transsion added a Dolby enabled low cost phone for consumers in Malaysia.

Additionally, Sharp Singapore launched the R8s Pro smartphone series with Dolby Vision and Dolby Atmos and Realme launched the GT6, the first smartphone to support Dolby Vision video capture in telephoto video.

Also, Apple launched the iPhone 16, which supports Dolby Atmos and Dolby Vision, and records in Dolby Vision.

Key Challenges:

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Our success depends on our ability to address the rapid pace of change in mobile devices, and we must continuously collaborate with mobile device OEMs to incorporate our technologies.

The mobile market is heavily concentrated, so we rely on a small number of partnerships with key participants in this market.

We rely on a small number of partnerships with key participants in this market.

If we are unable to maintain these key relationships, we may experience a decline in mobile devices incorporating our technologies.

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We must also continue to support the development and distribution of Dolby-enabled content via various ecosystems.

Additionally, we face geopolitical challenges including changes in diplomatic and trade relationships, trade protection measures, and import or export licensing requirements.

Consumer Electronics

We have an established presence in the home entertainment market across devices such as AVRs, soundbars, wireless and smart speakers, DMAs, and Blu-Ray players, through the inclusion of our DD+ technology, and increasingly through the inclusion of Dolby Atmos and Dolby Vision.

AAC and HE-AAC technologies also have broad adoption through our patent licensing programs.

We have an established presence in the home entertainment market across devices such as wireless and smart speakers, soundbars, DMAs (devices that connect a computer to a home media system), and AVRs, through the inclusion of our branded audio codecs, and increasingly through the inclusion of Dolby Atmos and Dolby Vision.

Our patent licensing technologies also have broad adoption in the home entertainment market.

We continue to focus on expanding the availability of Dolby technologies to new devices.

At CES in January 2023, LG and Samsung each announced 2023 soundbar lineups that support Dolby Atmos.

Also in fiscal 2023, Sonos launched their premium smart speaker, the Sonos Era 300, with Dolby Atmos.

Zebronics announced a new soundbar that supports Dolby Atmos to be sold in India.

Jabra launched headphone products that support Dolby Atmos.

XGIMI announced the 4K long throw home projector with Dolby Vision.

In fiscal 2024 Sonos launched headphones that support Dolby Head Tracking with Dolby Atmos.

Additionally, VIZIO announced integration of Dolby Atmos across its entire 2024 soundbar lineup.

Finally, Meta announced support for Dolby Atmos across its MetaQuest headset device lineup.

Key Challenges :

We must continue to present compelling reasons for consumers to demand our technologies wherever they enjoy entertainment content, while promoting creation and broad availability of content in our formats.

To the extent that OEMs do not incorporate our technologies in current and future products, our revenue could be impacted.

Additionally, we face geopolitical challenges including changes in diplomatic and trade relationships, trade protection measures, and import or export licensing requirements.

With relatively short product life cycles for many consumer electronics, OEMs can add or remove certain of our technologies from their products which could impact our revenue.

In addition, to the extent that our technology is not included in future industry standards, our revenue could be impacted.

Personal Computers

DD+ continues to enhance audio playback in both Mac and Windows operating systems, including native support in their respective Safari and Microsoft Edge browsers.

DD+ enhances audio playback in Mac computers through the operating system with native support in the Safari browser, and Windows-based PCs through PC OEM implementations and native support in the Microsoft Edge browser.

Dolby's presence in these browsers enables us to reach more users through various types of content, including streaming video entertainment.

A number of PCs from partners such as Apple, Lenovo, Dell, Samsung, and ASUS also support Dolby Vision and/or Dolby Atmos, with continued expansion of applications through music, streaming, and gaming.

In fiscal 2023, Tencent's streaming music platform QQ Music launched Dolby Atmos support in Mac operating systems.

Also in fiscal 2023, Microsoft launched its latest tablets that support Dolby Vision and Dolby Atmos.

A number of personal computers from partners such as Apple, Lenovo, Dell, Samsung, Microsoft and ASUS also support Dolby Vision and/or Dolby Atmos, with continued expansion of applications through music, streaming, and gaming.

At CES in January 2024, Alienware and ASUS announced their first gaming PC monitors to support Dolby Vision, and Dell announced that its latest XPS laptops will offer the combined Dolby Vision and Dolby Atmos experience.

Also in fiscal 2024, Lenovo launched several new flagship products that support Dolby Vision and Dolby Atmos - including the Yoga Air, moto razr and moto S50 Neo.

Lenovo's new Thinkpad X1 Carbon Gen 13 Aura Edition supports Dolby Vision, and its Thinkbook 16 Gen7+ and Thinkbook 16 Gen 7 supports Dolby Atmos.

Several of our patent licensing technologies have significant presence in this market, and we benefited from significant new agreements this year with Lenovo, Acer, Asus, and (in October 2024) HP for HEVC.

Key Challenges :

Demand for PCs has recently been declining and it remains uncertain when, if, and to what extent PC demand will return to historic levels.

We must continuously collaborate and maintain our key partnerships with PC manufacturers to incorporate our technologies, and we must continue to support the development and distribution of Dolby content via various ecosystems.

Additionally, we face geopolitical challenges including changes in diplomatic and trade relationships, trade protection measures, and import or export licensing requirements.

Demand for personal computers has fluctuated significantly in recent years.

We must continuously collaborate and maintain our key partnerships with personal computer manufacturers to incorporate our technologies, and we must continue to support the development and distribution of Dolby content via various ecosystems.

To the extent that personal computer manufacturers do not incorporate our technologies in current and future products, our revenue could be impacted.

Beginning with PCs shipping with Windows 11, version 24H2, Microsoft is changing the way Dolby’s DD and DD+ decoders are provided to third party personal computer OEMs.

For such devices, Dolby has begun distributing those codecs directly to personal computer OEMs instead of through Microsoft’s Windows operating system.

We do not expect this change to have a material impact on our revenue.

Other Markets

DD+ is incorporated in the Xbox and PlayStation gaming consoles that support gaming content and streaming for movie and television content.

We generate revenue from the automotive industry primarily through the adoption of Dolby Atmos in cars.

During fiscal 2024, we increased the number of auto OEM customers from 10 to over 20.

New partners during the year include Hyundai, Mahindra and Cadillac, the latter of whom announced the 2025 OPTIQ EV with Dolby Atmos.

In addition, Mercedes continued to increase the number of models that support Dolby Atmos.

Additionally, Rivian launched the second generation of its flagship vehicles, the R1S SUV and R1T pickup, that feature support for Dolby Atmos.

Gaming consoles such as the Sony PlayStation and the Microsoft Xbox use DD+ to support gaming content and streaming for movie and television content.

The PlayStation 5 supports compatible Dolby Atmos-enabled living room devices.

The Xbox Series X and Series S gaming consoles support Dolby Vision and Dolby Atmos for streaming and gaming content.

Additionally, our technologies continue to be incorporated into the latest headphones by various OEMs.

In fiscal 2023, Sony Interactive Entertainment announced that PlayStation 5 is unlocking support for compatible Dolby Atmos-enabled living room devices with the latest PS5 system software beta, available to beta participants in select markets.

Sony Interactive Entertainment also announced support for Dolby Atmos on the PS5.

We also generate revenue from the automotive industry through disc playback devices as well as other elements of the entertainment system, and through the adoption of Dolby Atmos Music.

In fiscal 2023, Mercedes-Benz adopted Dolby Atmos and Dolby Atmos Music in several of its car models, and continues to add our technologies to more models and ship more models globally.

Also in fiscal 2023, Chinese electric car manufacturer Li Auto and NetEase Cloud Music announced a collaboration to deliver Dolby Atmos Music in Li Auto cars.

Additionally, Guangzhou Automobile Group, a large Chinese auto manufacturer, announced the launch of a new sport sedan that features Dolby Atmos, and NIO and Lotus launched cars that support Dolby Atmos beyond the domestic Chinese market into Europe as well.

Yangwang announced its first car, the Yangwang U8 model, supporting Dolby Atmos, our fifth automotive OEM this year.

In fiscal 2024, Alienware released 27 4K Dual Resolution Gaming Monitor that supports Dolby Atmos.

Key Challenges :

Consumer demand for devices in the gaming industry is impacted by anticipation of console refresh cycles, which could result in fluctuations in our revenue.

Our automotive related revenue growth will be impacted if OEMs do not incorporate our technologies in their latest products.

The long development cycle of the automotive industry reduces the frequency of our opportunities to be incorporated into additional products.

Additionally, the automotive industry is cyclical, so our revenue from the auto market is affected by the broader cycles of the industry.

Consumer demand for gaming devices is impacted by anticipation of console refresh cycles, which could result in fluctuations in our revenue.

In addition, the gaming console market has competition from mobile devices and gaming PCs, which have faster refresh cycles and appeal to a broader consumer base.

Automotive revenue has been negatively impacted by a decline in the portion of cars that have optical disc playback.

Shortages of certain semiconductor components could result in lower implementation of our technologies in vehicles by automotive manufacturers.

Our revenue growth will be impacted if OEMs do not incorporate our technologies in their latest products, which can be more prominent in industries with longer development cycles such as the automotive industry.

Additionally, we face geopolitical challenges including changes in diplomatic and trade relationships, trade protection measures, and import or export licensing requirements.

Included within Other Markets is also licensing revenue from audio and imaging technologies used to create Dolby experiences through Dolby Cinema.

Included within Other Markets is also licensing revenue from audio and video technologies used to create Dolby experiences through Dolby Cinema.

We continue to expand our global presence for Dolby Cinema, with sites located in the U.S.

and internationally.

The breadth of motion pictures for Dolby Cinema continues to grow with over 500 theatrical titles in both Dolby Vision and Dolby Atmos having been announced or released from all of the major studios as of the end of fiscal 2023.

The breadth of movie content for Dolby Cinema continues to grow with films available in Dolby Atmos and Dolby Vision accounting for over 80% of U.S.

Box Office revenue in fiscal 2024.

In the third quarter of fiscal 2024 Melco Resorts & Entertainment opened Studio City Cinema, which is the first Dolby Cinema in the Hong Kong Macau Region.

Key Challenges:

Although the premium large format market for the cinema industry has been growing, Dolby Cinema competes with other existing offerings.

Our success depends on our partners and their success, and our ability to differentiate our offering, deploy new sites, and attract and retain a global viewing audience.

In addition, the success of our Dolby Cinema offering is tied to global box office performance generally.

COVID-19 has had a significant effect on theatrical exhibition, which could impact the financial viability of our key partners.

The response to COVID-19 has had a negative impact on our cinema-related revenue and consumer demand, although consumer demand for the cinema has been improving.

It is uncertain whether consumer demand for the cinema will return to previous levels.

Additionally, the recently concluded strikes by the Writers Guild of America and SAG-AFTRA effectively halted the production, release and promotion of certain films for an extended period.

The resulting impacts of those stoppages may result in near-term decreases in box office receipts and our cinema-related revenue.

Our success depends on our partners and their success, and our

ability to differentiate our offering and deploy new sites.

In addition, the success of our Dolby Cinema offering is tied to global movie production and box office performance generally.

For example, the strikes by the Writers Guild of America and Screen Actors Guild - American Federation of Television and Radio Artists ("SAG-AFTRA") in 2023 effectively halted the production, release and promotion of certain films for an extended period.

That disruption resulted in, and similar disruptions to movie production and exhibition in the future may lead to, decreases in box office receipts and our cinema-related revenue.

PRODUCTS AND SERVICES

A majority of our products and services revenue is derived from the sale of audio and imaging products for the cinema, television, broadcast, communication, and entertainment industries.

A majority of our products and services revenue is derived from the sale of audio and imaging products for the cinema industry.

Revenue from Dolby.io is also included in products and services.

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Key Challenges:

Demand for our cinema products is dependent upon our partners and their success in the market, industry and economic cycles, box office performance, and our ability to develop and introduce new technologies, further our relationships with content creators, and promote new cinematic audio and imaging experiences.

A significant portion of our growth opportunity lies in international markets, which are subject to geopolitical risks.

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We may also be faced with pricing pressures or competing technologies, which would affect our revenue.

We have also experienced supply chain shortages and increased shipping costs that have created challenges to maintain the sufficient supply of cinema products to meet the demand in the market.

In addition, supply chain constraints may impact our ability to provide cinema products and services to our customers.

COVID-19 has also negatively impacted the financial health of our cinema customers and partners.

In addition, the recently concluded strikes by the Writers Guild of America and SAG-AFTRA effectively halted the production, release and promotion of certain films for an extended period.

The resulting impacts of those stoppages may lead to decreased box office receipts in the near term, which could potentially impact exhibitors' willingness and ability to invest in our cinema products .

We are focused on bringing Dolby’s decades of sight and sound technology to a broader range of media content and digital experiences.

We are expanding our addressable market to enhance a broader range of content, by offering solutions to companies building real-time digital experiences that increase audience engagement.

Our solution provides the capability to stream high quality audiovisual content in ultra-low latency which reduces the delay between the action and the viewer.

Long lead times and increased cost of materials due to the macroeconomic conditions, including higher interest rates have also negatively impacted the financial health of our cinema customers and partners, leading to reduced new product investment and lower demand.

In addition, the strikes by the Writers Guild of America and SAG-AFTRA in 2023 effectively halted the production, release and promotion of certain films for an extended period.

The resulting impacts of those stoppages have resulted in, and may continue to lead to, decreased box office receipts in the near term, which could potentially impact exhibitors' willingness and ability to invest in our cinema products .

Our strategy for Dolby.io is to bring Dolby’s audio and video technologies to a broader range of media content and digital experiences.

We are expanding our addressable market by offering solutions to companies building real-time digital experiences that increase audience engagement.

For instance, our solution can provide the capability to stream high quality audiovisual content with ultra-low latency that reduces the delay between the action and the viewer.

Content being delivered with almost no delay enables our customers to create real-time interaction in their apps and services.

This lifelike interaction is essential to the experiences companies, particularly in sports and entertainment, are creating.

Over time, we believe this way of delivering and engaging with content will be used more broadly.

This near instantaneous interaction is essential to the experiences companies, particularly in sports and entertainment, are creating.

Over time, we believe this way of delivering and engaging with content will be used more broadly, thereby increasing their business opportunity.

Key Challenges:

Dolby.io is an early-stage business, and it is uncertain when or if it will be a material revenue driver.

Our success in this market will depend on adoption from companies building real-time digital experiences that

increase audience engagement, the volume of usage of the services and our ability to monetize our services.

In addition, the development and maintenance needed to provide a reliable and scalable platform may require us to develop new skills internally for our current employees or hire external specialized talent.

Our success in this market will depend on adoption by companies building real-time digital experiences that increase audience engagement, the volume of usage of the services and our ability to monetize our services.

In addition, the development and maintenance needed to provide a reliable and scalable platform may require us to incur additional costs to develop new skills within our existing employee base or hire external specialized talent.

Although the market for real-time experiences has been growing, Dolby.io competes with other offerings.

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We apply the royalty exception to these arrangements, which requires that we recognize sales-based royalties at the later of when the sales occur based on our estimates or the completion of our performance obligations.

Our estimates of royalty-based revenue take into consideration the macroeconomic effect of global events, such as inflation, elevated interest rates, economic impacts related to COVID-19, or other economic conditions, which may impact supply chain activities as well as demand for shipments.

Our estimates of royalty-based revenue take into consideration the macroeconomic effect of global events, such as inflation, elevated interest rates, economic impacts related to industry challenges, or other economic conditions, which may impact supply chain activities as well as demand for shipments.

These estimates also 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.

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Upon receipt of royalty statements from the licensees with the actual reporting of sales-based royalties that we previously estimated, we record a favorable or unfavorable adjustment based on the difference, if any, between estimated and actual sales.

We also enter into fixed and guaranteed licensing fees arrangements, which require the licensee to pay a fixed, non-refundable fee.

We also enter into fixed and guaranteed licensing fees arrangements, that require the licensee to pay a fixed, non-refundable fee.

In these cases, control is transferred and the transaction price - the amount we expect to be entitled to in exchange for the license right - is recognized upon the later of contract execution or the effective date.

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The discount rate used for each arrangement reflects the rate that would be used in a separate financing transaction between us and the licensee at contract inception and takes into account the credit characteristics of the licensee and market interest rates as of the date of the agreement.

If we assess the financing component to be significant to the contract, the amount of fixed fee revenue recognized at the beginning of the license term will be reduced by the calculated

financing component.

If we assess the financing component to be significant to the contract, the amount of fixed fee revenue recognized at the beginning of the license term will be reduced by the calculated financing component.

The portion related to the financing component is recorded as interest income, and is not material to our consolidated financial statements.

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Factor Licensing Revenue Gross Margin

Other á Higher revenue from imaging patent pool administrative fees, higher revenue due to gaming console shipments, higher automotive revenue driven by higher adoption of Dolby Atmos ßà No significant fluctuations

PC â Lower revenue driven by lower shipments and lower recoveries, primarily from foundational audio technologies, partially offset by higher revenue from our imaging patent programs

Broadcast á Higher revenue from our imaging patent programs, partially offset by lower unit shipments primarily in STBs, impacting revenue from foundational audio technologies

CE â Lower revenue from unit shipments in DMAs, and lower revenue due to timing of minimum volume commitments, primarily impacting revenue from foundational audio technologies, partially offset by higher revenue from our imaging patent programs

Mobile á Higher revenue from new licensees in our audio patent programs and increased adoption of Dolby Vision, partially offset by lower revenue from minimum volume commitments

Broadcast â Lower revenue primarily due to timing of minimum volume commitments in imaging patents, lower recoveries, lower true-up impacting foundational technologies and imaging patents, and lower STB unit shipments, partially offset by adoption of Dolby Vision and Dolby Atmos ßà No significant fluctuations

Mobile â Lower revenue primarily due to timing of minimum volume commitments in our audio patent programs partially offset by timing of minimum volume commitments in our imaging patent programs and Dolby Vision adoption

CE â Lower revenue from unit shipments, including lower true up, and timing of minimum volume commitments in imaging patents, partially offset by higher recoveries

PC á Higher revenue from timing of minimum volume commitments in imaging patents, higher true-up, and higher recoveries

Other á Higher revenue from imaging patent pool administrative fees and higher automotive revenue driven by adoption of Dolby Atmos, partially offset by lower gaming revenue driven by lower unit shipments

Products and Services

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Factor Products and Services Revenue Gross Margin

Products á Increased demand for cinema equipment as the exhibitor market continues to recover á Higher cinema product sales partially offset by excess and obsolescence reserve

Products â Lower cinema products revenue as compared to the prior year á Higher gross margin due to higher inventory reserve provision in prior year

Services ßà No significant fluctuations ßà No significant fluctuations

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Category Key Drivers

Compensation & Benefits á Higher costs of $6.8 million primarily due to higher variable compensation

Travel á Higher costs of $2.5 million due to increased company travel as a result of fewer COVID-19 travel restrictions, and increased in-person presence at certain events

Other â Lower contractor spend, stock-based compensation expense, depreciation, salaries, bonus and other miscellaneous expenses

Sales and Marketing

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Category Key Drivers

Legal, Professional, and Contractors â Lower costs of $10.6 million primarily due to timing of patent program-related expenses

Marketing Programs á Higher costs of $8.3 million primarily due to increased marketing activities

Travel á Higher costs of $5.2 million due to increased travel as a result of fewer COVID-19 travel restrictions, and increased in-person presence at certain events

Compensation & Benefits â Lower payroll salaries expense of $4.7 million primarily due to lower headcount

Compensation & Benefits â Lower costs of $9.3 million in payroll salaries due to lower headcount resulting from restructuring activities

Tradeshows â Lower costs of $7.2 million primarily due to non-repeating events in the prior year

Contractors â Lower costs of $4.6 million primarily due to lower patent litigation expenses

Other á Higher costs of $5.0 million primarily due to larger marketing activations in the current year

General and Administrative

G&A expenses consist primarily of employee compensation and benefits, stock-based compensation, depreciation and amortization, facilities and information technology costs, as well as professional fees and other costs associated with external contractors.

G&A expenses consist primarily of employee compensation and benefits expenses, stock-based compensation, depreciation and amortization, facilities and information technology costs, as well as professional fees and other costs associated with external contractors.

Fiscal Year Ended Change

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Percentage of total revenue 21% 20%

On August 7, 2019, Intertrust Technologies ("Intertrust") filed complaints against each of our customers AMC Entertainment Holdings, Inc., Cinemark Holdings, Inc., and Regal Entertainment Group in the U.S.

District Court for the Eastern District of Texas, alleging that the use of systems including certain cinema products, which were supplied under commercial agreements that we acquired as a part of an acquisition in 2014, infringed various Intertrust patents, and seeking damages based on the revenues of the defendants.

We recorded $34.4 million in fiscal 2022 within G&A expenses, reflecting a settlement payment and an immaterial accrual.

We believe that these amounts fully resolve all claims relating to Intertrust’s patent assertions.

Category Key Drivers

Other Miscellaneous Expenses â Lower costs of $34.4 million related to the resolution of the legal matter discussed above, in the prior year

Credit Loss Expense â Lower credit loss expense of $6.3 million primarily due to higher collections

Compensation & Benefits á Higher costs of $5.3 million primarily due to higher variable compensation, higher payroll salaries expense of $4.3 million due to increased headcount due to the MPEG LA (as defined below) acquisition

Legal, Professional, and Contractors á Higher costs of $2.2 million primarily due to transaction costs resulting from the MPEG LA acquisition

Legal, Professional, and Contractors á Higher costs of $6.9 million in legal and professional services largely due to M&A activities

Other á Higher costs of $2.7 million in stock-based compensation expense, and higher depreciation expense

Restructuring Charges

Restructuring charges recorded as operating expenses in our consolidated statements of operations represent costs associated with separate restructuring plans implemented in various fiscal periods.

Restructuring charges recorded as operating expenses in our consolidated statements of operations represent costs associated with separate individual restructuring plans implemented in various fiscal periods.

The extent of our costs arising as a result of these actions, including fluctuations in related balances between fiscal periods, is based on the nature of activities under the various plans.

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Percentage of total revenue 1% 4%

In April 2024, we initiated restructuring actions with the purpose of focusing our resources on our highest strategic priorities.

In connection with this plan, we recorded an expense in the third quarter of fiscal 2024 of $4.6 million in severance and other related benefits.

Cash payment of the severance and other termination benefits were substantially completed by the end of the fourth quarter of fiscal 2024.

These activities resulted in gross pre-tax operating income savings of approximately $3 million in fiscal 2024 and are expected to result in savings of approximately $11 million within fiscal 2025.

The impact of these estimated savings on our operating expenses have been and will be mostly offset by increased investment in our strategic priorities and the effects of inflation on our remaining expenses.

In September 2023, we initiated a restructuring plan with the purpose of focusing our resources on our highest strategic priorities.

In connection with this plan, we recorded an expense in the fourth quarter of fiscal 2023 of $13.4 million in severance and other related benefits and an impairment loss of $16.9 million related primarily to internally developed software for projects we are no longer pursuing.

In continuation with this plan, we recorded an expense in the first quarter of fiscal 2024 of $7.4 million in severance and other related benefits.

Cash payment of the severance and other termination benefits were substantially completed by the end of the second quarter of fiscal 2024.

These activities resulted in gross pre-tax operating income savings of approximately $40 million within fiscal 2024, which was consistent with our expectations.

The impact of these savings on our operating expenses was offset by increased investment in our strategic priorities and the effects of inflation on our remaining expenses.

In June 2023, we implemented a focused restructuring plan, primarily consisting of workforce reductions and facility consolidations to improve execution in alignment with our strategy and to reduce our cost structure through improved utilization of our global infrastructure.

As a result of these actions, we recorded restructuring charges of $10.9 million in severance and other related benefits offered to approximately 130 impacted employees and $6.9 million related to facility consolidation in New York, NY.

In September 2023, we initiated a focused restructuring plan with the purpose of focusing our resources on our highest strategic priorities.

We recorded expense of $13.4 million in severance and other related benefits offered to approximately 160 impacted employees.

The remaining components of this plan are expected to be completed in November 2023, resulting in an additional charge of approximately $5.0 million in severance and other termination benefits.

In conjunction with focusing our resources on our top strategic priorities, we recorded an impairment loss of $16.9 million related primarily to internally developed software for projects we are no longer pursuing.

As a result of these actions, we recorded expense in the third quarter of fiscal 2023 of $10.9 million in severance and other related benefits and expense of $6.9 million related to a facility consolidation in New York, NY.

Actions and expenses related to this plan were substantially completed by the end of the second quarter of fiscal 2024.

These activities resulted in gross pre-tax operating income savings of approximately $20 million in fiscal 2024, which was consistent with our expectations.

The impact of these savings on our operating expenses was mostly offset by increased investment in our strategic priorities and the effects of inflation on our remaining expenses.

For additional information on our Restructuring programs, see Note 13 " Restructuring " to our consolidated financial statements.

Other Income/Expense

Other income/expense primarily consists of interest income earned on cash and investments and the net gains or losses from foreign currency transactions, derivative instruments, our proportionate share of net income or losses from our equity method investment, and gains and losses on the sales of marketable securities from our investment portfolio.

Other income/expense primarily consists of interest income earned on cash and investments and the net gains or losses from foreign currency transactions, derivative instruments, our proportionate share of net income or losses from our equity method investment in Access Advance, and gains and losses on the sales of marketable securities from our investment portfolio.

Fiscal Year Ended Change

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Category Key Drivers

Interest Income á Higher yields on current year investment balances due to increased interest rates

Other Income á Higher income primarily due to higher yields on our SERP balances in the current year, and higher foreign currency transaction gains

Other Income á Higher income from an equity method investment in the current year

Interest Income á Higher yields on invested cash balance

Our effective tax rate is based on our fiscal year results and is affected by several factors.

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Factor Impact On Effective Tax Rate

Stock-based Compensation á Lower benefit related to the settlement of stock-based awards.

Research and Development á Lower benefit from R&D tax credits.

Tax Cuts and Jobs Act of 2017 â Current year benefit related to lower Transition Tax liability under the Tax Cuts and Jobs Act of 2017 resulting from the application of a recent Tax Court opinion in Varian Medical Systems, Inc.

Tax Contingencies â Higher benefit from the lapse in statute of limitations

Foreign Operations á Lower benefit from foreign earned income

LIQUIDITY, CAPITAL RESOURCES, AND FINANCIAL CONDITION

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We believe that these sources will be sufficient to satisfy our currently anticipated cash requirements through at least the next twelve months.

As of September 29, 2023, we had cash and cash equivalents of $745.4 million, which consisted of cash and highly liquid money market funds.

In addition, we had short and long-term investments of $237.0 million, which primarily consisted of government bonds, corporate bonds, municipal debt securities, certificates of deposit, commercial paper, and U.S.

agency securities.

As of September 27, 2024, we had cash and cash equivalents of $482.0 million, which consisted of cash.

In addition, we had long-term investments of $89.3 million, which primarily consisted of an equity method investment and an equity security without a readily determinable value.

The following table presents selected financial information as of September 27, 2024 and September 29, 2023 (in thousands):

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We continue to invest in S&M and R&D to promote the overall growth of our business and technological innovation.

We retain sufficient cash holdings to support our operations and we also purchase investment-grade securities diversified among security types, industries, and issuers.

During fiscal 2024, we purchased all of the issued and outstanding equity interests of GE Intellectual Property Licensing, LLC and GE Technology Development, Inc, which, collectively with each of their subsidiaries, comprise GE Licensing, an intellectual property licensing business primarily targeting the consumer digital media and electronics sectors, for an aggregate cash purchase price of $443.6 million, subject to certain purchase price adjustments.

Our cash and cash equivalents, short-term and long-term investments declined significantly as result of this acquisition.

We continue to retain sufficient cash holdings to support our operations and we also have historically purchased investment-grade securities diversified among security types, industries, and issuers.

We have used cash generated from our operations to fund a variety of activities related to our business in addition to our ongoing operations, including business expansion and growth, acquisitions, and repurchases of our Class A common stock.

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Net cash provided by operating activities $ 327,252 $ 367,081

Net cash provided by operating activities increased $48.5 million in fiscal 2023 compared to fiscal 2022, primarily due to the following:

Net cash provided by operating activities decreased $39.8 million in fiscal 2024 compared to fiscal 2023, primarily due to the following:

Factor Impact On Cash Flows

Operating assets and liabilities á Higher inflows due to lower accounts receivable and higher operating lease liabilities, partially offset by lower accounts payable and accrued liabilities and lower income taxes

Operating assets and liabilities â Lower inflows due to higher accounts receivable and lower non-current liabilities, offset by higher accounts payable and accrued liabilities

Net Income á Lower restructuring charges, offset by lower revenue

Investing Activities

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Net cash provided by/(used in) investing activities $ (286,292) $ 54,206

Net cash provided by/(used in) investing activities was $350.1 million higher in fiscal 2023 compared to fiscal 2022, primarily due to the following:

Net cash provided by/(used in) investing activities was $340.5 million lower in fiscal 2024 compared to fiscal 2023, primarily due to the following:

Factor Impact On Cash Flows

Purchase of Investments á Lower outflows for the purchase of marketable investment securities

Proceeds from Investments á Higher inflows from the sale and maturity of marketable investment securities

Business Combinations á Inflows due to restricted cash balances acquired in connection with the MPEG LA acquisition

Business Combinations â Higher outflows due to business combinations

Proceeds from Investments á Higher inflows from the sale of marketable investment securities

Financing Activities

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Net cash used in financing activities $ (287,814) $ (236,812)

Net cash used in financing activities was $373.7 million lower in fiscal 2023 compared to fiscal 2022, primarily due to the following:

Net cash used in financing activities was $51.0 million higher in fiscal 2024 compared to fiscal 2023, primarily due to the following:

Factor Impact On Cash Flows

Share Repurchases á Lower outflows due to lower common stock repurchases

Dividend Payments â Higher outflows for the payment of our quarterly cash dividend to common stockholders primarily as a result of a $0.03 per share increase compared to the prior fiscal year

Share Repurchases â Higher outflows due to higher common stock repurchases

Purchase of non-controlling interest in business combination â Higher outflows related to acquiring a portion of the noncontrolling interest in our consolidated subsidiary

Shares Repurchased for Tax Withholdings â Higher outflows due to higher fair value of shares withheld for taxes

Common Stock Issuance â Lower inflows from employee stock option exercises

Contractual Obligations and Commitments

The following table presents a summary of our contractual obligations and commitments as of September 29, 2023 (in thousands):

Payments Due By Fiscal Period

Years More Than

5 Years Total

Naming Rights.

Purchase obligations 29,934 4,667 — — 34,601

Donation commitments 1,718 232 172 332 2,454

Total $ 44,446 $ 31,497 $ 17,348 $ 36,006 $ 129,297

Naming Rights.

We are party to agreements for naming rights of certain facilities, most significantly for naming rights and related benefits with respect to the Dolby Theatre in Hollywood, California, the location of the Academy Awards®.

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Dolby Live is a fully integrated performance venue offering live concerts in Dolby Atmos.

As of September 27, 2024, we had $79.4 million remaining on these agreements, with $13.1 million due during fiscal 2025.

For additional details regarding our naming rights commitments, see Note 14 " Commitments and Contingencies " to our consolidated financial statements.

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Purchase obligations primarily consist of our non-cancelable commitments made under agreements to purchase goods and services related to Dolby Cinema and for purposes that include information technology and telecommunications, marketing and professional services, and manufacturing and other R&D activities.

As of September 27, 2024, we had $16.3 million remaining on these commitments, with $12.8 million due during fiscal 2025.

Donation Commitments.

Our donation commitments relate to non-cancelable obligations that consist of maintenance services and installation of imaging and audio products in exchange for various marketing, branding, and publicity benefits.

Our donation commitments relate to non-cancelable obligations that consist of maintenance services and installation of audio and imaging products in exchange for various marketing, branding, and publicity benefits.

As of September 27, 2024, we had $1.4 million remaining on these commitments, with $0.2 million due during fiscal 2025.

For additional details regarding our donation commitments, see Note 14 " Commitments and Contingencies " to our consolidated financial statements.

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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 7. Management’s Discussion and Analysis