Dolby_Laboratories_DLB

Important disclosures appear on the last page of this report.
The Henry Fund
Henry B. Tippie School of Management
Ajay Kaushik Rajagopalan [ajaykaushik-rajagopalan@uiowa.edu]
Dolby Laboratories, Inc. (DLB) March 8, 2016
Information Technology – Diversified Electronics Stock Rating Sell
Investment Thesis Target Price $37-$44
Dolby Laboratories is a leader in audio technologies and since its inception in
1965, it has established itself as the de-facto standard for lossless audio
technologies. Dolby has supplemented its audio technology offerings with
image technologies such as Dolby Vision. The current offerings of Dolby have
positioned it well to leverage the digital television boom in emerging markets.
The future growth prospects of Dolby are for good measure factored into the
current stock price and hence this report recommends a sell rating.
Drivers of Thesis
 The demand for Set Top Boxes (STBs) and Digital TVs is expected to grow
at 7% CAGR through 2020 and this is expected to drive the broadcasting
licensing growth at 6.7% CAGR through 2020.(10)
 Wanda group is partnering with Dolby to open 200 new Dolby Cinema halls
by 2024 and this is expected to drive the product segment growth at 16.6%
CAGR through 2020.(8,19)
 Future Audio/Video conferencing products of British Telecom and Premier
Global Services Inc. (PGi) will incorporate the Dolby Voice technology.
Dolby Voice witnessed a 30% growth in customer base in Q1 16.
Risks to Thesis
 Dolby employs the pull marketing strategy by partnering with content
creators. The content creators have no obligation to use Dolby, and if they
stop partnering with Dolby, the entire strategy of Dolby to leverage the end
market demand for content would fall apart.
 Increased clamor for open standards for broadcasting, if successful, will
eliminate Dolby’s licensing revenue base.
 Greater than anticipated decline in PC sales, DVD players, and Blu-ray
players will significantly lower the DCF stock price. Current 5-year CAGR
assumptions stand at -6.6% and -3.4% for these segments respectively.
DCF $40.65
DDM $19.77
Relative Multiple $34.33
Price Data
Current Price $39.57
52wk Range $29.87 – 41.84
Consensus 1yr Target $39.00
Key Statistics
Market Cap (B) $3.97
Shares Outstanding (M) $101.35
Institutional Ownership 94.6%
Five Year Beta 0.695
Dividend Yield 1.21%
Analyst Est. 5yr Growth 10.00%
Price/Earnings (TTM) 24.42
Price/Earnings (FY1) 18.8
Price/Sales (TTM) 3.36
Debt/Equity 0.00
Profitability
Operating Margin 22.00%
Profit Margin 18.69%
Return on Assets (TTM) 8.81%
Return on Equity (TTM) 10.31%
Earnings Estimates
Year 2013 2014 2015 2016E 2017E 2018E
EPS $1.86 $2.02 $1.77 $1.82 $1.83 $1.84
growth -24.7% 8.60% -12.38% 2.56.% 0.74% 0.52%
12 Month Performance Company Description
Dolby Laboratories is a technology company
that develops audio, imaging, and voice
technologies used in the entertainment and
communications industry. Dolby
Laboratories, since its inception in 1965, has
established itself as the de-facto standard for
lossless audio technologies. The company
offers technologies to audio, video, and
gaming content creators such as artists,
directors, studios, and game developers.
18.8
10.3
13.3
17.7
0
5
10
15
20
P/E ROE (%)
DLB Sector
Source:FactSet
-30%
-20%
-10%
0%
10%
20%
30%
M A M J J A S O N D J F
S&P 500 DLB
Source: Yahoo Finance

EXECUTIVE SUMMARY
Dolby Laboratories is a technology company that develops
audio, imaging, and voice technologies used in the
entertainment and communications industry.
Dolby’s business model revolves around generating
demand for their products by partnering with audio, video,
and gaming content creators such as artists, directors,
studios, and game developers. The business model is
unique because Dolby offers deep discounts on the
services and equipments that it provides to content
creators. This strategic relationship with content creators
helps Dolby leverage the end market demand for the
content created and drive the demand for its technologies
to be incorporated in consumer electronic devices. The
Semiconductor companies and the Original Equipment
Manufacturers (OEMs) must pay Dolby licensing fees to
use Dolby’s proprietary technologies and such is the
magnitude of these licensing revenues that it accounts for
nearly 90% of the total revenue earned by Dolby in a fiscal
year. The consumer electronics segments that will be
major drivers of revenue for Dolby are the demands for Set
Top Boxes and Digital TVs. The number of digital TV
households globally are expected to grow at 7% CAGR
through 2020 and most of this growth is expected to be
seen in the emerging markets of Asia, Latin America, and
Sub-Saharan Africa. (9)
Dolby Vision is an imaging technology that improves
resolution, increases brightness, and enables the capture
of High Dynamic Range (HDR) images. Dolby is working
with 4K TV manufacturers to integrate its Dolby Vision into
their products and with content creators who create
content fit for 4K TVs.
Dolby Voice and Dolby Cinema are two other initiatives of
Dolby that will aid in incremental revenue generation for
the company. After weighing the individual end market
demand for each individual segment that Dolby caters to,
the 5-year CAGR revenue growth was modelled to be 5.7%.
Dolby’s current share price when compared to the DCF
model price indicates that the future growth potential of
Dolby is mostly factored into the current stock price.
Hence this report recommends a sell rating for Dolby.
COMPANY DESCRIPTION
Dolby Laboratories, since its inception in 1965, has
established itself as the de-facto standard for lossless
(perfect reconstruction from compressed files) audio
technologies. With over 5100 issued patents and another
3200 pending patents, Dolby has a strong portfolio of
proprietary technologies. The patents that are current to
the period of Dolby’s last 10k filing are expected to run
until April 2040.(5) It is very important to keep track of the
health of the intellectual property rights (IPRs) held by
Dolby as close to 90% of Dolby’s revenue is through
licensing of its proprietary technologies. During fiscal year
2015, Dolby completed the acquisition of Doremi and the
Doremi-related assets for total purchase consideration of
$112.5 million. (21) Doremi boasts of a product line that
includes Audio/Video equipments and also holds
important patents in 4K resolution area. This acquisition
will help Dolby to provide an end-to-end system. A release
can now be filmed in Dolby, have its sound mixed in Dolby,
be encoded in a Dolby format, be sent to the customer on
a Dolby-licensed disc format or through a Dolby-equipped
set-top box, and be decoded with Dolby to be played back
on Dolby-licensed speakers. (1)
Revenue Decomposition
Source: 10K (5)
As can be seen from the pie chart above, Dolby generates
its revenue from three segments, the largest being
licensing. Dolby charges its customers a licensing fee for
using its audio/video technologies. The technologies that
are licensed are either developed in house, acquired, or
licensed from third parties. As licensing primarily deals
with licensing of IPRs, the majority of the cost incurred is
through amortization of the acquired IPRs or royalty
obligations on third party IPRs. Dolby enjoys a 99% gross
margin on its licensing revenue stream.
89.4%
8.6% 1.9%
FY 15 Revenue Streams
Licensing Product Services

Most of the licensing business consists of a two-tier
licensing model whereby the Dolby technology is licensed
to a semiconductor manufacturer as well as Original
Equipment Manufacturers (OEMs). Dolby’s 10k refers to
these semiconductor manufacturers as implementation
licensees. These manufacturers then sell their ICs to OEMs
and these OEMs need to obtain what Dolby calls system
licenses to use the Dolby technology. While
implementation licensees pay a one-time licensing fee
upfront, the system licensees are charged both a one-time
fee and royalties. The royalties collected are dictated by
the number of Dolby technologies used and the volume of
the product sold by the OEMs.
Source: 10K (5)
Licensing can be further broken down into 5 major
segments based on the product segment that the Dolby
technology serves. These segments are Broadcast (TVs,
STBs), PCs, Consumer Electronics (DVD, Blu-ray Players),
Mobile, and other devices such as gaming consoles and
automobile entertainment systems.
Source: Statista (10)
Licensing Revenue from broadcasting has generally shown
an increasing trend except for FY 2015 where it only grew
by 1.1%. FY 15 marked a year of tepid growth for licensing
in general. However going forward, the Broadcasting
segment will witness tailwinds to end market demand
facilitated by the policy decisions in emerging markets
such as India to move from analog to digital television
services. This is reflected in the graphs shown above. The
number of households worldwide with digital TVs is
forecasted to grow at 7% CAGR through 2020.
44.0%
17.0%
14.0%
13.0%
12.0%
FY 15 Licensing Revenue
Breakdown
Broadcast PC Consumer Electronics Mobile Others
57.9 71.9
126.7
0.
100.
200.
2014 2015 2018*
Forecasted demand for Set Top
Boxes (STB's)
North America Europe Asia/Pacific Latin America

Source: IDC (2)
As shown in the graph above, PCs have and will be
witnessing depressed demand and hence its contribution
towards licensing revenue has and will be declining. The
biggest revenue generator in PCs for Dolby is the optical
disk drives that are built into these PCs. Slowing demand
for PCs as well as the trend to move away from building
PCs without optical disk drives will continue to impact the
revenue generated from licensing the Dolby technology to
PC manufacturers.
Source: IC Insights (11)
The consumer electronics segments also suffers from
depressed end market demand, not too dissimilar to the
PC segment. The demand for DVD and Blu-ray players will
keep declining in the coming years as more and more
media is consumed through streaming services as opposed
to DVDs and Blu-ray discs.
Dolby does not enjoy a stellar clientele in terms of its
mobile business except for LG, Lenovo, and HTC. Losing its
place in the flagship Samsung Galaxy models has
significantly impaired the growth potential in the mobile
licensing segment. This is reflected in the drastic drop in
mobile licensing revenue growth rate from 57.4% in 2013
to -1.2% in 2015. The end market demand for mobile
devices is expected to grow at around 9-10% through
2018. Considering Dolby’s clientele in terms of its mobile
segment, it is expected to witness 3.1% CAGR growth
through 2020, much lesser than the near double digit
growth expected for mobile devices on the whole.
Source: IDC (13)
Dolby Voice has added 30 new A/V conferencing product
manufactures as customers in Q1 16. This is a 30% rise in
the customer base. FY 15 witnessed an 18.5% increase in
“Other” licensing revenues from FY 14. With several large
customers in the rollout stage and with BT Conferencing
expected to maintain its momentum, “Other” licensing
revenues should witness strong growth through 2020. In
addition to contributing to licensing revenue growth,
Dolby Voice will also spur the growth for “Other” Product
revenues with increased sales of the conference phones
that incorporate Dolby Voice.
Dolby Cinema would be a premium offering for exhibitors
and moviegoers and would include both Dolby Vision and
Dolby Atmos technologies. Not only will this spur the
licensing revenue growth, but also will contribute to the

product segment growth of Dolby in terms of increased
demand for cinema servers, projectors, and audio devices.
Wanda group, which also owns AMC, has decided to open
50 new Dolby Cinema screens in AMC Prime auditoriums
in 2016. This number will go up to 100 by 2024. In China,
Wanda group plans to unveil 100 new Dolby Cinema
theatres by 2020. PVR Cinemas has announced its plan to
open 50 screens fitted with Dolby Atmos technology by
2017. (8, 19, 16) These developments portend a healthy
market for Cinema and Broadcast products. The increased
adoption of BT MeetMe audioconferencing technology
will help grow the “Other” products revenue from $4.2
million in 2015 to $16.7 million in 2020. The “Other”
product segment witnessed a 77.1% YoY growth between
2014 and 2015 and this clearly signals that the BT MeetMe
adoption is gaining traction.
Services provide support for theatrical and television
production and hence growth in services segment revenue
is tied to the product segment growth. The services
segment has been modelled to grow at 9.9% CAGR
through 2020. The product segment is modelled to grow
at 16.6% CAGR through 2020.
Geographic Distribution of Revenue
Dolby generates over 70% of its annual revenue outside of
the US and hence has significant international exposure.
Source: 10K (5)
With such a significant exposure to international markets,
Dolby has various foreign currency forward contracts to
hedge against currency risks. The licensing revenue
generated is based on the location of the licensees’
headquarters. Product revenues are recognized based on
the destination of the product shipment and services
revenues are similar to products as they are recognized
based on the location of the service contract. Efforts on
Dolby’s part to hedge against currency risks have dictated
the model’s assumption to disregard loss or gain due to
strengthening dollar on earnings. While this is a
reasonable assumption to make for the forecast horizon,
the strength of the US dollar needs to be continuously
monitored against the hedging contracts that Dolby has, as
any adverse developments in this regards will cause more
than a trivial change to the earnings of Dolby.
Doremi Acquisition
In 2014, Dolby agreed to purchase Doremi Labs for $92.5
million in cash plus an additional $20 million in contingent
consideration that may be earned over a four year period.
Doremi labs has a strong patent portfolio in 4K technology
space and manufactures A/V equipment that can help
Dolby to position an end-to-end technology solution for its
customers. With this diversified product portfolio, content
can be created, encoded, transferred, transmitted, and
played using Dolby technologies. Since Doremi’s
acquisition, the growth for Cinema products has gone from
-27.6% in 2014 to 46.6% in 2015. The benefits of this
acquisition will play out in the coming years and the DCF
model assumes positive synergies from this acquisition
driving the 16.6% CAGR growth for the Cinema Product
Segment through 2020. (1)
Pull Marketing Strategy
Dolby’s business model revolves around generating
demand for their products by partnering with audio, video,
and gaming content creators such as artists, directors,
studios, and game developers. Dolby offers deep discounts
on the services and equipment that it provides to content
creators in an attempt to tie the content creators to
Dolby’s technologies.
29%
21%
13%
13%
10%
7%
7%
FY 15 Percentage Sales by location
US South Korea Japan Europe
Taiwan China Other

Source: 10K (5)
The graph above reflects the impact of pull marketing
strategy on Dolby’s gross margins across segments. By
leveraging the end market demand for the content
created, Dolby charges licensing fees on its technologies to
be used by Semiconductor companies and the Original
Equipment Manufacturers (OEMs) in the design and
manufacture of consumer electronic devices that aid in
content consumption. Such is the magnitude of these
licensing revenues that it accounts for nearly 90% of the
total revenue earned by Dolby in a fiscal year. This pull
marketing strategy is driver of Dolby’s historically high
gross margin levels as 90% of the revenue generator has a
gross margin close to 99.5%. Despite the forecast horizon
indicating a greater thrust to Product Segment growth,
Licensing will still account for majority of the total revenue
and hence this strategy will be relevant going forward.
Since content drives demand, it would be prudent to
monitor the popularity that Dolby enjoys with the content
creators as any tectonic shift away from Dolby
technologies for creating content would signify
catastrophic falls in revenue for Dolby.
RECENT DEVELOPMENTS
Recent Earnings and Future Guidance
FY 2015
(A)
Q1 16
(A)
FY 16
(Guidance)
Revenue (M) 967.4 240.8 1000-1030
Consensus
Revenue (M)
973.7 239.1 1017.2
Surprise history
(%)
-0.6 0.7 N/A
Actual EPS 1.73 0.30 N/A
Consensus EPS 1.61 0.28 1.72
Surprise history
(%)
7.7 5.88 N/A
Source: FactSet
It can be seen that the consensus estimate for revenue is
very close to the actual sales reported by Dolby. For FY 16,
Dolby has given a revenue guidance in the range of $1
billion to $1.03 billion. Even the consensus estimate
predicts that Dolby would become a billion dollar company
in FY 16. In terms of EPS, Dolby has consistently performed
better than what the analysts predicted and it wouldn’t be
surprising if that remains a theme in FY 16 as well. The
growth estimates for Dolby that have been assumed for
the DCF model place the sales for FY 16 at around $1.02
billion. This revenue estimate is not too far away from the
consensus revenue estimate and also falls within the
guidance band of Dolby.
Wanda Cinema Line in China
Wanda Cinema Line Corporation Ltd and Dolby
Laboratories announced a collaboration to open 100 Dolby
Cinema locations through 2020. The first location is
expected to be opened during the second quarter of 2016.
Dolby Cinema would be a premium offering for exhibitors
and moviegoers and would include both Dolby Vision and
Dolby Atmos technologies. Not only will this spur the
licensing revenue growth, but also will contribute to the
product segment growth of Dolby. (8)
AMC Prime
Wanda group that also owns AMC has decided to open 50
new Dolby Cinema screens in AMC Prime auditoriums in
2016. This number will go up to 100 by 2024 therefore
bringing the total number of Dolby screens in the two
largest markets (USA& China) to 200. These developments
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
1000.0
Licensing Products Services
FY 15 Revenue vs Costs by
Segments
Revenue (millions) Costs (millions)

suggest that Cinema is best positioned in terms of product
segment growth for Dolby. (19). IMAX, the closest
competitor to Dolby in the Cinema segment has 943
commercial multiplex theatres in operation as of
December 31, 2015.
Dolby Voice Updates
British Telecom (BT) conferencing collaborated with Dolby
to use the Dolby Voice technology in designing BT
MeetMe. Dolby Voice provides noise cancellation
solutions that eliminate background noise while also
helping in voice separation and project individual voices as
coming from different virtual locations. BT conferencing is
the leading provider of conferencing technologies globally.
Dolby Voice has added another significant audio
conferencing provider in the last year in Premier Global
Services (PGi). PGi is a multinational corporation that
provides conferencing and collaboration solutions. Its
iMeet and GlobalMeet product lines are expected to
incorporate Dolby Voice in future product rollouts.
Dolby Vision Updates
Source: lowendmac.com (20)
Current display technologies work with a very limited
colour palette and do not have the requisite brightness to
mimic reality. Dolby Vision is a technology that aims at
increasing the brightness range and hence improving the
details in the bright and dark regions of images. Unlike
High dynamic range (HDR) imagery, Dolby Vision goes
beyond the 24 bit range used for JPEGs and standard
photography to accurately record more colours and
brightness.
Increased adoption of digital TVs across the world and the
consumer demand for better looking content create a
market opportunity that Dolby Vision can cash in on. New
content created that captures the extended brightness
and details will need upgrades to the display technologies.
Dolby Vision and HDR 10 are the two competing
technologies vying for the market growth that the display
technology upgrade will bring about. In terms of partners,
Dolby has entered agreements with LG, TLC, and Vizio to
incorporate Dolby Vision in some of their new 4K TVs.
However, Samsung has moved away from using Dolby
Vision and has instead created a HDR 10 based TV line with
LG also following suit. As more and more 4K content is
created and consumed, the direction that display
technologies take will become clear. However in terms of
pure technical standpoint, Dolby Vision is a superior
technology to HDR 10 as Dolby Vision equipment encodes
or decodes images differently rather than just adding a few
more levels of brightness. With OEMs looking to promote
their own offerings of HDR and trying to avoid licensing
fees that they would incur for Dolby Vision, it remains to
be seen if Dolby’s pull marketing strategy again leverages
the content creators to make OEMs switch to Dolby Vision.
Dolby Atmos for Virtual Reality
Dolby has announced a partnership with Virtual Reality
(VR) content creator Jaunt to bring its Atmos surround
sound technology to the world of VR. The market potential
for VR is very uncertain as it is a very recent technology
with most of the VR users comprised of early adopters.
However, by partnering with VR content creators, Dolby
has signaled a forward looking approach towards
exploring new markets. The management has stated that
Dolby is deeply committed to exploring prospects in
augmented reality and VR. If VR takes off, then Dolby
would be ideally positioned through its partnerships with
content creators to push the Dolby Atmos licenses to
mobile devices manufacturers. It would again be a case of
content driving licensing demand.

INDUSTRY TRENDS
Streaming media
Streaming media sites such as Netflix, Hulu, and Vudu are
fueling the industry trend of moving away from
conventional media consumption avenues such as DVDs
and Blu-ray discs to online content consumption. The
graph above represents the growth that Netflix has
witnessed and is expected to witness through 2020. The
number of household subscribers to Netflix alone is
expected to increase by 63% from 2015 to 2020 and this
paradigm shift in content consumption has resulted in
declining revenue for Dolby from consumer electronics
segment.
Source: Statista, AHAM (3)
The chart above shows the declining shipments of DVD
players and this declining trend is expected to continue. In
terms of emerging markets, the decline in demand for DVD
and Blu-ray players would not be as stark in the near future
as slow broadband speeds are a bottleneck to enjoying
streaming services such as Netflix. However, the shift in
customer preferences is real and as more and more
content is consumed online, consumer electronics such as
DVDs and Blu-ray players would lose relevance for Dolby.
The consumer electronics segment accounted for nearly
45% of the total revenue in 2007 and this has fallen to 14%
in 2015.During the forecast horizon, the revenue
contribution from DVDs and Blu-ray players is expected to
decline to 11.4%.
Virtual Reality
Virtual Reality (VR) is an industry trend that is exciting in
terms of growth prospects for Dolby. As VR headsets gain
momentum and traction among users, Dolby can leverage
its Atmos technology to enable VR content with spatial
audio surround system. As represented by the graph
above, VR is just starting out and is expected to reach $4
billion by 2017. There is however no certainty about the
growth trajectory of VR, but any growth in VR would augur
well for Dolby. Not only can Dolby leverage its Atmos
technology, but it can also leverage its Dolby Vision
technology to enable premium content creation.
MARKETS AND COMPETITION
As described earlier in the report, Dolby works closely with
content creators to spur demand for its products. Close to
90% of the revenue is generated from the licensing
segment. The majority of the licensing revenue comes in
two forms;
i) One-time fee paid by semiconductor/software
companies for using Dolby’s technology in designing their
hardware/software
19.1
54.5
70.4 81.5
114.9
0.
50.
100.
150.
2010 2014 2015 2016* 2020*
NUMBEROFHOUSEHOLDSIN
MILLIONS
Number of households
subscribing to Netflix
worldwide from 2010…
16418.2
14754.9
13841
12000
14000
16000
18000
FY 14 FY 15 FY 16 E
DVD Players Shipped in US (1000s)

ii) Royalty payments based on number of consumer
electronic units sold.
The remaining revenue comes from product sales (digital
cinema servers, projectors etc.) and services. Due to this
business model, Dolby competes in many different
markets and in many different customer segments thereby
making it hard to assign well defined competitors.
The underlying factors dictating the licensing revenue
suggest a strong dependence on the patent portfolio held
by the firms. This suggests that competition is along
product differentiation and exclusivity rather than cost. On
the other hand, product segment demand is dependent on
how closely Dolby works with the content creators and the
discounts it offers on its products. That would mean that
price is one of the underlying factors determining the
product competitive landscape.
Emerging Markets
The number of digital TV households globally are expected
to grow at 7% CAGR through 2020 and most of this growth
is expected to be seen in the emerging markets of Asia,
Latin America, and Sub Saharan Africa. Policy decisions
across the emerging markets have mandated the switch
from analog to digital television. India is one such example
of an emerging market where policy decision has
mandated the switch to digital television standards. The
market demand for STBs and digital TVs in various markets
has already been explored previously in the Revenue
Decomposition sub section of this report.
Countries such as India and China have included Dolby
Digital Plus as part of their broadcast specification
standards and these emerging markets are expected to
contribute to the steady growth of broadcasting revenue
for Dolby through the forecast horizon.
Global Television Broadcast Standards
Source: Wikimedia Commons (23)
ATSC refers to Advanced Televisions Systems Committee,
an international non-profit organization that develops
standards for digital television. As shown in the map
above, the whole of North America has adopted the ATSC
standards and Dolby’s AC3 audio technology is the audio
standard for ATSC.
All other broadcast television standards use an open
standard audio format called MPEG ACC. It is in these
other television standards that Dolby is trying to establish
its AC3, AC4 audio technologies. DVB-T, ISDB-T, DTMB
correspond to the broadcasting standards followed in the
emerging markets making it imperative for Dolby to target
these broadcasting standards.
Peer Comparisons
Source: FactSet (6)
Dolby operates in various spheres and hence it does not
have very well defined publicly traded competitors. DTS
Inc.’s audio technologies compete directly with those of
Dolby’s in the consumer electronics audio market.
However, most Blu-ray disc players as well as other audio
codec and sound bar manufacturers include technologies
from both companies in their products. This coexistence
will continue as long as long content creators do not chose
one technology over the other. When the revenue streams
of both companies are aligned and compared for similar
product lines, it is seen that Dolby earns 6.3 times the
revenue that DTS Inc. earns. FY 15 profit margin of DTS is
negative while Dolby earned a healthy after tax profit of
18.7%. This suggests that Dolby is perched favorably in
comparison to DTS Inc. Dolby is competing with IMAX in
the cinema market with both companies having similar
partnerships with movie theater chains such as Regal
Entertainment Group, AMC Entertainment Inc. , or
Cinemark Theatres. With most Dolby theatres opening in
2016 or beyond, accurate comparison in terms of revenue
isn’t possible. When looking at the FY15 numbers, Dolby is
seen to earn 2.6 times as much revenue as IMAX. These
Sales
(M)
Net
Profit
Margi
n (%)
ROA
(%)
ROE
(%)
P/E
(ntm
)
Debt/
Equity
Dolby 970.6 18.7 8.8 10.3 18.8 0.0
IMAX 373.8 14.7 7.1 10.9 34.8 4.8
DTS
Inc.
138.2 -8.9 -3.5 -5.8 19.3 77.1

comparisons suggest that Dolby’s financial health and
growth prospects are better than its closest competitors.
ECONOMIC OUTLOOK
The demand for Dolby’s technologies is driven by
consumer spending and hence all economic parameters
that affect consumer spending will impact the growth
potential of Dolby. The product portfolio that uses Dolby
technologies include Smartphones, set top boxes, PCs, Blu-
ray players , automobile entertainment systems, gaming
consoles , cinema technology , and other audio video
entertainment devices/solutions. Discretionary consumer
spending is positively correlated to GDP, negatively
correlated to unemployment rate, and impacted adversely
by rising interest rates.
Going forward, the GDP growth is expected to remain
stable at around 2% (2016-2018) and this should translate
to a steady demand in consumer discretionary electronic
products such as smartphones, tablets, PCs, and other
electronic devices. The forecasted decline in the Chinese
GDP growth is a cause for concern. Any slowdown in the
end market demand in China would be partially offset by
the increasing demand from India. India’s GDP is expected
to grow at 7-8% during the forecast period.
Source: Global Economic Prospects 2016, World Bank (15)
Unemployment rates have a negative correlation with
consumer discretionary sales. Increasing employment
increases the median disposable income and that
correlates positively with spending on consumer
discretionary electronics such as smartphones, tablets,
PCs, TVs etc. The unemployment rate in the US has
continued to decline and the Henry Fund team believes
that unemployment will settle between 4.95% over the
next 2 years.
Near 0% interest rates have kept the cost of debt low for
firms as well as individuals. Once the recent weakness in
the economy passes, the fed fund rates are expected to
move towards the 1.25% in the coming years. Even though
this increase in the fed fund rates will not take the interest
rate to the levels that were existing before the economic
recession of 2008-2009, it is still expected to make the cost
of capital dearer. Premium electronic devices such as 4K
TVs would see greater demand if easy financing options
were available. In a rising interest rate scenario, easy
financing options would be hard to come by.
Source: IBIS World (4)
The Per capita disposable income chart suggests that the
disposable income available for discretionary spending will
remain steady through 2021. Per capita disposable income
is an important measure of customer’s willingness to pay
and the steady levels indicate a similar spending outlook
throughout the forecast horizon.
CATALYSTS FOR GROWTH
R&D spending as a percentage of sales currently stands at
20.7%. Increased R&D spending as a percentage of sales
increases the probability of innovation, which would lead
to filing of new patents and potential increase in licensing
revenue. With over 5100 issued patents and another 3200
pending patents, Dolby has a strong portfolio of
proprietary technologies. There are patents current to the
last 10K filing that are expected to run till 2040. The OEMs
that use the Dolby licenses are supposed to pay royalty for
every unit sold and some royalty payments are expected
to run till the last patent of that particular technology
expires. Increased R&D spending can help add quality
patents to the portfolio.
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
2013 2014 2015E 2016F 2017F 2018F
Real GDP Growth
US China Global

Another major catalyst for growth would be the healthy
relationships that Dolby creates and maintains with its
content creators. The business model of Dolby is set up in
such a way that if content creators move away from Dolby,
OEMs and semiconductor manufacturers would no longer
see the need to buy Dolby licenses.
INVESTMENT POSITIVES
 The global shift towards digital television standards
will be the biggest driver of broadcasting licensing
growth. Dolby has successfully entered the Indian and
the Chinese broadcasting market and these emerging
economies will drive a significant portion of Dolby’s
future revenue.
 The relationship that Dolby maintains with its content
creators is very strong as is evidenced by the
increasing number of titles created using Dolby Atmos
and Dolby Vision technologies. In the 4 years since
Dolby Atmos was released, more than 200 film titles
have used it as their audio format. The Wanda Cinema
Line has committed to install Dolby Atmos and Dolby
Vision in over 200 theatres across US and China. The
online streaming services such as Vudu and Netflix
have announced support for Dolby Atmos content. As
content created using Dolby Technologies continues
to increase, revenues from both product and licensing
would increase.
 Dolby Voice’s strategic partnerships with BT
Conferencing and PGi will continue to drive growth.
Dolby Voice witnessed a 30% growth in customer base
in the last quarter alone and there is expected to be
increased product rollout activities in the years
coinciding with the forecast horizon.
INVESTMENT NEGATIVES
 Though Dolby provides technologies that are the de-
facto standards for audio broadcast, there is however
no binding contract on the content creators to use
Dolby. If the relationships that Dolby maintains with
content creators start to sour, then the whole business
model of content driving licensing revenue would fall
apart.
 Headwinds for Dolby’s technology offerings can also
come from OEMs who are trying to push for open
broadcasting standards. Samsung has moved away
from Dolby in recent years and in CES 2016, it unveiled
its own line of SUHD televisions. This is a trend that
needs to be monitored closely as OEMs moving away
from buying Dolby licenses will have significant
earnings impact due to declining incremental
revenues through royalties.
VALUATION
DCF, DDM, and relative P/E analysis have been used to
value Dolby Laboratories. These three valuation
techniques computed stock prices of $40.7, $19.8, and
$34.3 respectively. We believe that the value of the Dolby
stock is closest to the DCF model.
Dolby’s dividend payout policy is relatively recent as it
started only in the first quarter of 2015. The insufficient
history in terms of dividend payout has limited the scope
for making reasonable assumptions in terms of future
dividend payout. In the DDM model, for the next five
years, we assumed a constant payout ratio of 26.4% and
since this assumption does not have sufficient historical
backing, we have disregarded the DDM model. In FY 2015,
the payout ratio for Dolby was 22.6%.
Among all available competitors, IMAX and DTSI are the
two most aligned publicly traded competitors in terms of
business activities. The relative P/E analysis with these two
publicly traded competitors reveals a share price that is
lower than what the share trades at currently. Weighing
the price reflected by the relative P/E analysis model
against the fact that there are only 2 publicly traded
competitors suggests a limited scope of the relative P/E
model. Considering the abovementioned limitations of the
relative P/E valuation model, the share price suggested by
the model will be viewed subservient to the DCF model.
Short Term Revenue Growth Assumptions
Dolby has multiple business segments and each segment
faces differing end market demand. The revenue growth
rates for the DCF model have been projected by studying
the individual end market demand for each of these
business segments. Each of these segments have been
described in detail in the Revenue Decomposition sub
section under the Company Description section earlier in
this report. The end market demand drivers have also
been clearly delineated and discussed in detail in the
Revenue Decomposition sub section.
Dolby generates nearly 88-90% of its revenue by licensing
its technologies. The entire licensing segment of Dolby is

projected to grow at 4.3% CAGR through 2020. By 2020,
the contribution of licensing to the entire revenue of Dolby
is expected to drop below the 85% range. The reasons for
this decrease is not because of headwinds for licensing,
but because of the tailwinds in growth that will be seen for
the product segment of Dolby. The proposed Wanda
Cinema line Dolby Cinema theatres in China and the AMC
prime Dolby Cinema locations that in the US will drive the
product segment of Dolby to grow at 15.7% CAGR through
2020. Services segment, the last macro revenue segment
of Dolby mirrors the growth seen in the product segment
as Services deals with product support, installation,
product integration, and other engineering activities
related to Dolby products. Hence the CAGR growth rate of
Services segment is assumed to be 9.9% through 2020.
Dolby Voice has added 30 customers over the quarter that
took its customer base from 90 to 120. With several large
customers in the rollout stage and with BT Voice expected
to maintain its momentum, “Other” licensing revenues
should witness strong growth through 2020. Given the
strong end market demand prediction for Dolby Voice, the
14.6% CAGR growth assumption through 2020 for “Other”
licensing revenues seems justified. At this projected
growth, “Other” will increase its contribution to the total
licensing revenue from 12% in 2015 to 22.9% in 2020. In
addition to contributing to licensing revenue growth,
Dolby Voice will also spur the growth for “Other” Product
revenues with increased sales of the conference phones
that incorporate Dolby Voice. The revenue contribution of
“Other” products to the product segment is expected to
reach $16.7 million by 2020 from its current level of $4.2
million. The growth assumptions for individual segments
of Dolby have been presented in the table below:
Source: HF Estimates
Costs and Margins
In FY 14, Dolby’s management indicated that that Dolby is
nearing the end of a significant investment cycle. The
construction of new Dolby Headquarters and the Doremi
acquisition were part of that significant investment cycle.
These developments have dictated the modelling of
capital expenditure assumptions. Investments in Property,
Plant, and Equipment are modelled to grow at 9.4%, a level
that reflects the historical expenditure incurred by Dolby
to maintain its computer systems and software,
equipments, furniture, and other activities needed to run
its daily operations. What this end to the significant
investment cycle also signifies is the smoothening of the
depreciation expense across the years as significant
portion of the depreciation expense would be the
depreciation of the new headquarters building of Dolby.
Selling, General, and administrative (SG&A) costs are
modelled at 45.2% of revenue. Doremi acquisition resulted
in an increase in SG&A costs and with increased
assimilation of Doremi’s activities and the ensuing
economies of scale make the 45.2% assumption a
reasonable one. A sensitivity analyses run on the SG&A
assumptions reveal that at 2015 levels of 47.5%, the DCF
stock price falls below $40. If SG&A costs do not stabilize
to pre-acquisition levels either through increased revenue
or greater economies of scale, then current trading stock
price would indicate a premium value to the price
mentioned above. This is one of the reasons for taking a
sell position on Dolby as current stock price levels are
trading very close to the target price range arrived at using
the DCF model. Research and Development (R&D)
expenses are expected to remain at 2015 levels of 20.7%
to revenue. 20.7% indicates a healthy expenditure on R&D
and with the growth outlook that faces Dolby justifies this
assumption. Other costs have been modelled at historical
average levels as there are no indications to suggest any
adverse developments to skew the cost assumptions in
either directions of historical assumptions.
The revenue growth assumptions and cost assumptions
result in gross margins that are expected to stay above
85% during the forecast horizon. This is a reasonable level
for gross margin considering the growth outlook especially
for the broadcast licensing segment and the product
segment of Dolby. Dolby Vision, Dolby Atmos, Dolby Digital
Plus, and Dolby Atmos are the key technologies that are
going to drive the gross profit margins of Dolby. These
assumptions have also driven the net profit margin of
Segment Model assumption for
5-year CAGR growth
(through 2020 in %)
Licensing-Broadcasting 6.7
Licensing-PC -6.6
Licensing-Consumer
Electronics
-3.4
Licensing-Mobiles 3.1
Licensing-Others 14.6
Products-Cinema 15.7
Products-Broadcasting 13.9
Products-Other 31.8
Services 9.9

Dolby to settle at 15.1% through the forecast horizon. The
net profit margin in 2015 for Dolby was 18.7% and this
suggests that the product growth outpacing the licensing
growth would eat into the profit margins of Dolby as
products are often sold at discounts unlike licenses that
enjoy a 99.5% margin on every agreement signed.
Perpetuity Growth Assumption
Source: Statista, IMF (14)
The forecast for Global GDP suggests a 3.9% GDP growth
in 2020 and this has driven the long term growth
assumption of 3.5% as the end market segments that
Dolby targets are essentially dependent on the health of
the economy. Since the DCF model price is most sensitive
to the perpetuity growth assumption, a sensitivity analysis
was done by varying the CV growth of NOPLAT. If Dolby
were to maintain a status quo after 2020, i.e. a 0% growth
in perpetuity, then its DCF stock price should be around
$30. Even in the no growth scenario, Dolby’s intrinsic value
according to the DCF model returns a positive value
suggesting that Dolby can weather rough and uncertain
times in the future as long as it makes relevant products
that shields it from contraction.
Valuation Summary
The stock price according to the DCF model is $40.65 and
this represents a 4.2% premium over the consensus
estimate of $39. The sensitivity analysis performed on the
DCF model’s stock price by varying the CV Growth rate,
Beta, WACC, SG&A costs, Capex growth, and cost of
products suggests the consensus estimate stock price to
be a valid estimate of Dolby’s intrinsic worth if it doesn’t
perform as well in the emerging market as the DCF model
assumes or it fails to consolidate its post-acquisition costs.
The current market price of Dolby suggests that the
market has for good measure priced in Dolby’s growth
prospects and hence the consensus estimate actually
lends support to the sell rating that this report
recommends.
KEYS TO MONITOR
One of the key trends that needs to be monitored is the
growth of VR systems and the popularity that VR content
gains. If Dolby is positioned appropriately through its
Dolby Atmos technology to ride the VR growth, then
smartphone makers such as Apple, Samsung would be
forced to buy Dolby licenses. As VR is still in its infancy, this
report has not modelled the future growth that could
ensue due to VR.
The UHD alliance that was created in 2015 to determine
the specifications of Ultra HD has included Dolby Vision as
a supporting technology. However, there is still a push
from TV manufacturers to move towards open
broadcasting standards and this trend needs to be
monitored closely.
A key assumption for growth in the DCF model is the
growth that Dolby Cinema will witness due to the
proposed Dolby Cinema theatres to be opened by the
Wanda Cinema Line Corporation. This trend needs to be
monitored as increased adoption of Dolby’s technologies
by either retrofitting existing theatres or building new
ones signify significant growth opportunities for Dolby.
Among the emerging markets, India’s adoption of Dolby’s
cinema technologies needs to be monitored. PVR group of
India announced in 2015 to retrofit 50 screens with Dolby
Atmos technology by 2017. However, the other
component of Dolby Cinema, i.e. Dolby Vision is yet to be
widely adopted in the Indian market. Any change in this
trend will indicate significant increases in revenue.
REFERENCES
1. Seeking Alpha ‘s article on Doremi acquisition:
http://seekingalpha.com/article/2190603-dolby-you-
cant-argue-with-90-percent-margins
2. Short term forecasts for PC demand:
http://www.idc.com/getdoc.jsp?containerId=prUS258666
15
3.2
3.4
3.6
3.8
4.
4.2
2016 2017 2018 2019 2020
Forecasted Global GDP
(%)
Forecasted Global GDP (%)

3. DVD shipments in the US:
http://www.statista.com.proxy.lib.uiowa.edu/statistics/2
20729/forecast-in-dvd-player-shipments-in-the-us/
4. Per Capita disposable income:
https://www.ibisworld.com/gosample.aspx?cid=1&rtid=4
5. Dolby Laboratory Inc., 2015 form 10-K
6. Financial data for peer comparisons from FactSet
7. Dolby smartphone clientele:
http://www.dolby.com/us/en/categories/smartphone.ht
ml
8. News on Wanda Line in China:
http://investor.dolby.com/releasedetail.cfm?ReleaseID=9
51961
9. Number of Digital TV households worldwide from 2010
to 2020 by region:
http://www.statista.com/statistics/268538/number-of-
digital-tv-households-by-world-region-since-2008/
10. Forecasted Demand for Set Top Boxes:
http://www.statista.com/statistics/461527/tv-stb-
shipments-worldwide-by-region/
11. Comparing market sizes and forecasted growth rates
for systems, ICs:
http://electroiq.com/blog/2015/03/comparing-market-
sizes-and-forecasted-growth-rates-for-systems-ics
12. Number of households subscribing to Netflix
worldwide from 2010 to 2020:
http://www.statista.com/statistics/273885/quarterly-
subscriber-numbers-of-netflix/
13. Worldwide Smartphone Vendor Market Share:
http://www.idc.com/prodserv/smartphone-market-
share.jsp
14. Global GDP forecasts:
http://www.statista.com/statistics/273951/growth-of-
the-global-gross-domestic-product-gdp/
15. World Bank GDP forecasts:
http://pubdocs.worldbank.org/pubdocs/publicdoc/2016/
1/88501452035054522/Global-Economic-Prospects-
January-2016-Table1.pdf
16. PVR’s announcement to use Dolby Atmos:
http://www.dolby.com/in/en/technologies/dolby-
atmos/pvr-announcement.html
17. Earnings news, transcripts, and earnings calls:
http://investor.dolby.com/releases-financial.cfm
18. P/E and ROE for sector:
http://people.stern.nyu.edu/adamodar/New_Home_Pag
e/dataarchived.html#returns
19. AMC Prime news:
http://www.indiewire.com/article/why-dolby-cinema-at-
amc-prime-is-a-great-place-to-see-the-fall-blockbusters-
20151208
20. Dolby Vision commentary:
http://lowendmac.com/2016/dolby-vision-the-future-of-
television/
21. Doremi Acquisition:
http://investor.dolby.com/releasedetail.cfm?releaseid=8
27738
22. Virtual Reality revenue forecasts:
http://www.statista.com/statistics/426496/virtual-realiy-
hmds-sales-revenue-worldwide/
23. Global broadcasting standards:
https://en.wikipedia.org/wiki/Broadcast_television_syste
ms#/media/File:PAL-NTSC-SECAM.svg
IMPORTANT DISCLAIMER
Henry Fund reports are created by student enrolled in the
Applied Securities Management (Henry Fund) program at
the University of Iowa’s Tippie School of Management.

These reports are intended to provide potential employers
and other interested parties an example of the analytical
skills, investment knowledge, and communication abilities
of Henry Fund students. Henry Fund analysts are not
registered investment advisors, brokers or officially
licensed financial professionals. The investment opinion
contained in this report does not represent an offer or
solicitation to buy or sell any of the aforementioned
securities. Unless otherwise noted, facts and figures
included in this report are from publicly available sources.
This report is not a complete compilation of data, and its
accuracy is not guaranteed. From time to time, the
University of Iowa, its faculty, staff, students, or the Henry
Fund may hold a financial interest in the companies
mentioned in this report.

Dolby Laboratories
Revenue Decomposition
All figures in millions
Fiscal Years Ending Sep 30 2013 2014 2015 2016E 2017E 2018E 2019E 2020E
Licensing 807.08 878.84 868.11 899.15 936.63 979.47 1029.12 1072.18
Product 80.60 59.22 83.90 100.99 122.10 146.97 169.67 180.82
Services 21.99 22.11 18.62 19.55 22.49 25.86 28.45 29.87
Total revenue 909.67 960.18 970.64 1019.69 1081.21 1152.31 1227.23 1282.87
% Licensing 88.72% 91.53% 89.44% 88.18% 86.63% 85.00% 83.86% 83.58%
% Product 8.86% 6.17% 8.64% 9.90% 11.29% 12.75% 13.83% 14.10%
% Services 2.42% 2.30% 1.92% 1.92% 2.08% 2.24% 2.32% 2.33%
% Total Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Licensing Growth Rate 1.58% 8.89% ‐1.22% 3.57% 4.17% 4.57% 5.07% 4.18%
Product Growth Rate ‐22.04% ‐26.53% 41.68% 20.36% 20.90% 20.38% 15.44% 6.57%
Services Growth Rate ‐22.33% 0.56% ‐15.78% 5.00% 15.00% 15.00% 10.00% 5.00%
Total Revenue Growth Rate ‐1.79% 5.55% 1.09% 5.05% 6.03% 6.58% 6.50% 4.53%
Licensing Revenue Breakdown:
Broadcast (TVs,STBs) 298.62 377.90 381.97 408.71 437.32 465.74 496.01 528.26
PC 193.70 166.98 147.58 135.77 124.91 117.42 110.37 104.85
Consumer Electronics (DVD,Blue Ray Players) 129.13 131.83 121.54 115.46 109.69 106.40 104.27 102.18
Mobile (Smartphones,tablet) 96.85 114.25 112.85 116.80 120.89 124.52 128.25 131.46
Others(Gaming,Automotive ) 88.78 87.88 104.17 122.40 143.82 165.40 190.21 205.42
Total Revenue from licensing 807.08 878.84 868.11 899.15 936.63 979.47 1029.12 1072.18
Broadcast Growth Rate 10.54% 26.55% 1.08% 7.00% 7.00% 6.50% 6.50% 6.50%
PC Growth Rate ‐12.94% ‐13.79% ‐11.62% ‐8.00% ‐8.00% ‐6.00% ‐6.00% ‐5.00%
Consumer Electronics Growth Rate ‐14.46% 2.09% ‐7.81% ‐5.00% ‐5.00% ‐3.00% ‐2.00% ‐2.00%
Mobile Growth Rate 52.36% 17.97% ‐1.22% 3.50% 3.50% 3.00% 3.00% 2.50%
Others Growth Rate 1.58% ‐1.01% 18.53% 17.50% 17.50% 15.00% 15.00% 8.00%
% Broadcast 37.00% 43.00% 44.00% 45.45% 48.64% 51.80% 55.17% 58.75%
% PC 24.00% 19.00% 17.00% 15.10% 13.89% 13.06% 12.28% 11.66%
% Consumer Electronics 16.00% 15.00% 14.00% 12.84% 12.20% 11.83% 11.60% 11.36%
% Mobile 12.00% 13.00% 13.00% 12.99% 13.45% 13.85% 14.26% 14.62%
% Others 11.00% 10.00% 12.00% 13.61% 16.00% 18.40% 21.15% 22.85%
% Total licensing revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Products Revenue Breakdown:
Cinema 70.12 50.93 74.67 88.86 106.64 127.96 147.16 154.51
Broadcast 7.25 5.92 5.03 6.04 7.25 8.34 9.17 9.63
Other 3.22 2.37 4.20 6.08 8.21 10.68 13.34 16.68
Total Products Revenue 80.60 59.22 83.90 100.99 122.10 146.97 169.67 180.82
Cinema Growth Rate ‐22.04% ‐27.37% 46.63% 19.00% 20.00% 20.00% 15.00% 5.00%
Broadcast Growth Rate ‐29.83% ‐18.37% ‐14.99% 20.00% 20.00% 15.00% 10.00% 5.00%
Other Growth Rate 3.95% ‐26.53% 77.11% 45.00% 35.00% 30.00% 25.00% 25.00%
% Cinema 87.00% 86.00% 89.00% 87.99% 87.34% 87.06% 86.73% 85.45%
% Broadcast 9.00% 10.00% 6.00% 5.98% 5.94% 5.67% 5.40% 5.32%
% Other 4.00% 4.00% 5.00% 6.02% 6.73% 7.26% 7.86% 9.22%
% Total Products Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
International Revenue % 72.00% 67.00% 71.00% 71.00% 71.00% 72.00% 72.00% 74.00%
Domestic Revenue % 28.00% 33.00% 29.00% 29.00% 29.00% 28.00% 28.00% 26.00%

Dolby Laboratories
Income Statement
Revenue:
Revenue ‐ licensing 807.08 878.84 868.11 899.15 936.63 979.47 1029.12 1072.18
Revenue ‐ product 80.60 59.22 83.90 100.99 122.10 146.97 169.67 180.82
Revenue ‐ services 21.99 22.11 18.62 19.55 22.49 25.86 28.45 29.87
Total revenue 909.67 960.18 970.64 1019.69 1081.21 1152.31 1227.23 1282.87
Cost of licensing 16.86 10.81 10.88 13.70 14.27 14.93 15.68 16.34
Cost of products 64.27 45.13 70.49 80.78 97.66 117.56 135.72 144.64
Cost of services 15.59 14.23 13.45 13.52 15.55 17.88 19.67 20.66
Gain from amended patent licensing agreement 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Impairment of products provided under operating leases 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total cost of revenue 96.72 70.18 94.82 108.00 127.49 150.37 171.07 181.63
Gross margin 812.96 890.00 875.82 911.68 953.73 1001.93 1056.16 1101.24
Operating Expenses:
Research & development expenses 168.75 183.13 201.32 211.50 224.26 239.00 254.55 266.09
Selling, general & administrative expenses 393.07 430.75 461.35 460.91 488.72 520.85 554.72 579.87
Restructuring charges, net 5.87 2.40 ‐0.08 0.00 0.00 0.00 0.00 0.00
Loss (gain) on settlements 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total operating expenses 567.69 616.28 662.59 672.40 712.98 759.86 809.27 845.95
Operating income 245.26 273.72 213.23 239.28 240.75 242.08 246.90 255.28
Interest income 3.85 3.34 4.54 3.96 4.04 4.12 4.21 4.30
Interest expense 0.58 ‐0.18 0.18 0.00 0.00 0.00 0.00 0.00
Other income (expenses), net 2.11 ‐1.15 28.19 6.52 6.91 7.37 7.85 8.20
Income (loss) before provision (benefit) for income taxes 250.65 276.10 245.78 249.76 251.70 253.57 258.95 267.78
Provision for income taxes 60.34 67.38 62.54 66.44 66.95 67.45 68.88 71.23
Net income (loss) including controlling interest 190.30 208.72 183.24 183.32 184.75 186.12 190.07 196.55
Less: net income (loss) attributable to controlling interest ‐1.03 ‐2.62 ‐1.85 ‐1.94 ‐2.04 ‐2.14 ‐2.25 ‐2.36
Net income (loss) attributable to Dolby Laboratories, Inc. 189.27 206.10 181.39 181.38 182.71 183.98 187.82 194.19
Year end shares outstanding 101.739 102.269 101.035 100.94 101.11 101.38 101.72 102.13
Net earnings per share ‐ basic 1.86 2.02 1.77 1.82 1.83 1.84 1.87 1.93
Payout Ratio 215.05% 0.00% 22.60% 26.44% 26.44% 26.44% 26.44% 26.44%
Dividends per share 4.00 0.00 0.40 0.48 0.48 0.49 0.49 0.51

Dolby Laboratories
Balance Sheet
Assets:
Cash & cash equivalents 454.40 568.47 531.93 628.51 779.00 919.88 1055.73 1187.60
Net Cash & cash equivalents 454.40 570.61 534.86 628.51 779.00 919.88 1055.73 1187.60
Short-term investments 140.27 231.21 138.90 139.85 140.80 141.75 142.72 143.69
Accounts receivable, gross 97.97 87.78 103.11 108.32 114.85 122.40 130.36 136.27
Less: allowance for doubtful accounts 0.51 1.62 1.54 1.52 1.61 1.72 1.83 1.91
Accounts receivable, net 97.46 86.17 101.56 106.80 113.24 120.69 128.53 134.36
Raw materials 2.05 1.01 3.25 4.64 4.92 5.24 5.58 5.83
Work in process 0.00 0.05 3.28 1.33 1.41 1.50 1.60 1.67
Finished goods 8.04 7.48 7.35 10.31 10.93 11.65 12.40 12.97
Inventories 10.09 8.54 13.87 16.27 17.25 18.38 19.58 20.47
Deferred taxes 78.38 86.45 97.10 98.56 99.33 100.06 102.19 105.67
Prepaid expenses 10.20 11.67 13.68 15.18 16.10 17.16 18.27 19.10
Other current assets 14.04 7.15 7.53 10.78 11.43 12.18 12.98 13.57
Income tax receivable 7.89 4.06 10.83 8.06 8.13 8.19 8.36 8.65
Assets held for sale 0.00 0.00 0.00 0 0 0 0 0
Prepaid expenses & other current assets 32.12 22.88 32.03 34.03 35.66 37.53 39.61 41.31
Total current assets 812.72 1005.85 918.33 1024.01 1185.27 1338.29 1488.36 1633.10
Long-term investments 306.34 296.34 321.02 329.43 338.06 346.91 356.00 365.33
Property, plant & equipment, gross 376.05 461.19 604.77 661.57 723.71 791.68 866.04 947.39
Less: accumulated depreciation 133.14 171.44 201.68 274.23 343.95 412.31 480.60 549.98
Property, plant, & equipment, net 242.92 289.76 403.09 387.34 379.76 379.38 385.45 397.41
Intangible assets, net 41.32 63.70 127.51 109.98 95.30 85.51 75.86 66.08
Goodwill 279.72 277.57 307.71 307.71 307.71 307.71 307.71 307.71
Deferred taxes 43.29 41.75 46.18 45.96 46.32 46.66 47.65 49.28
Other non-current assets 11.64 9.05 9.46 10.87 11.53 12.29 13.09 13.68
Total assets 1737.95 1984.01 2133.29 2215.29 2363.94 2516.75 2674.11 2832.59
Liabilities and Stockholder's equity
Current Liabilities:
Accounts payable 10.70 15.90 20.71 15.71 16.66 17.76 18.91 19.77
Accrued royalties 6.08 2.53 1.95 3.25 3.45 3.67 3.91 4.09
Amounts payable to joint licensing program partners 40.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Amounts payable to patent administration program partners 0.00 43.44 40.47 44.32 46.99 50.08 53.34 55.76
Accrued compensation & benefits 54.42 71.68 70.32 61.41 65.11 69.39 73.91 77.26
Accrued amounts payable to patent pool partners 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Accrued professional fees 4.40 6.16 6.52 5.97 6.33 6.74 7.18 7.51
Accrued current portion of litigation settlement 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other accrued liabilities 32.80 34.57 50.05 36.42 38.62 41.15 43.83 45.82
Accrued liabilities 137.80 158.38 169.31 151.36 160.49 171.05 182.17 190.43
Income taxes payable 3.39 2.60 0.75 2.22 2.23 2.25 2.30 2.38
Current portion of long-term debt 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Deferred revenue 20.93 12.50 18.91 22.19 23.53 25.08 26.71 27.92
Total current liabilities 172.82 189.37 209.68 191.48 202.92 216.13 230.09 240.49
Long-term debt, net of current portion 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Long-term deferred revenue 19.66 19.28 30.58 22.25 23.59 25.14 26.78 27.99
Long-term portion of litigation settlement 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Supplemental retirement plan obligations 2.14 2.41 2.40 2.33 2.47 2.64 2.81 2.93
Non-current tax liabilities 30.99 30.72 62.84 43.72 44.06 44.39 45.33 46.87
Other liabilities 12.31 10.59 11.78 13.04 13.83 14.74 15.70 16.41
Other non-current liabilities 45.44 43.72 77.02 59.09 60.36 61.76 63.83 66.22
Total liabilities 237.92 252.36 317.29 272.83 286.87 303.03 320.70 334.70
Stockholder's Equity:
Common Stock (net of treasury and ESOP) 18.91 46.52 17.67 9.26 8.00 7.81 7.78 7.77
Retained earnings 1454.38 1660.49 1800.86 1933.79 2067.61 2202.31 2339.79 2481.90
Accumulated other comprehensive income 7.81 3.01 ‐11.46 ‐11.46 ‐11.46 ‐11.46 ‐11.46 ‐11.46
Total stockholders' equity - Doly Laboratories, Inc. 1481.11 1710.02 1807.07 1931.58 2064.14 2198.65 2336.10 2478.21
Controlling interest 18.92 21.63 8.94 10.88 12.92 15.06 17.31 19.67
Total stockholders' equity 1500.03 1731.65 1816.01 1942.47 2077.06 2213.72 2353.42 2497.89
Owner Equity + Liabilities 1737.95 1984.01 2133.29 2215.29 2363.94 2516.75 2674.11 2832.59

Dolby Laboratories
Cash Flow Statement
Fiscal Years Ending Sep 30 2013 2014 2015
Cash flow from operations:
Net income (loss) including controlling interest 190.30 208.72 183.24
Depreciation & amortization 53.25 53.28 69.13
Stock-based compensation expense 64.33 65.68 67.07
Accretion of discounts on debt securities ‐ ‐ ‐
Accretion of discounts or amortization of premium on investments ‐ ‐ ‐
Amortization of premium on investments 10.23 9.40 9.16
Excess tax benefit from exercise of stock options ‐ ‐ ‐
Excess tax benefit from exercise of stock options & vesting of restricted stock ‐ ‐ ‐
Excess tax benefit from excercise of stock options ‐0.48 ‐2.43 ‐2.54
Provision for doubtful accounts ‐0.17 1.12 0.03
Litigation settlement ‐ ‐ ‐
Losses (gains) on put rights ‐ ‐ ‐
Losses (gains) on auction rate certificates ‐ ‐ ‐
Deferred income taxes ‐19.64 ‐6.70 ‐14.48
Gain from amended patent licensing agreement ‐ ‐ ‐
Loss (gain) on sale of ownership interest in subsidiary ‐ ‐ ‐26.22
Loss on impairment of long-lived assets ‐ ‐ ‐
Payment on litigation settlement ‐ ‐ ‐
Cash distributions to controlling interest ‐ ‐ ‐
Other non-cash items affecting net income ‐1.03 1.82 5.13
Restricted cash ‐ ‐ ‐
Accounts receivable ‐53.64 10.17 ‐7.01
Inventories 9.17 3.82 5.84
Prepaid expenses & other current assets ‐ ‐ ‐
Prepaid expenses & other assets 3.89 ‐0.35 ‐3.60
Accounts payable & accrued liabilities ‐ ‐ ‐
Accounts payable & other liabilities 21.89 24.12 ‐7.38
Income taxes, net 2.31 0.95 21.77
Deferred revenue ‐1.08 ‐8.73 8.98
Other non-current liabilities ‐4.68 0.69 0.27
Net cash flows from operating activities 274.66 361.55 309.38
Cash flow from investing:
Purchases of investments ‐ ‐389.28 ‐392.94
Purchases of available-for-sale securities ‐482.37 ‐ ‐
Proceeds from sale of available-for-sale securities 548.74 ‐ ‐
Proceeds from maturities of available-for-sale securities 143.75 ‐ ‐
Proceeds from sales of investment securities ‐ 159.56 305.23
Proceeds from maturities of investment securities ‐ 137.06 146.15
Purchases of property, plant & equipment ‐26.71 ‐78.72 ‐157.55
Payments for business acquisitions, net of cash acquired ‐ ‐ ‐93.52
Acquisitions, net of cash acquired ‐ ‐ ‐
Other investments ‐3.00 ‐ ‐
Purchases of intangible assets ‐4.05 ‐37.95 ‐37.42
Proceeds from sale of property, plant & equipment & assets held for sale 0.50 3.36 0.03
Proceeds from sale of ownership interest in subsidiary, net ‐ ‐ 27.22
Change in restricted cash ‐ 1.03 ‐0.79
Other investing activities ‐ ‐ ‐
Net cash flows from investing activities 176.87 ‐204.94 ‐203.60
Cash flow from financing:
Payments on debt ‐0.08 ‐ ‐
Proceeds from the exercise of stock options ‐ ‐ ‐
Proceeds from issuance of common stock 15.96 33.37 28.63
Issuance of class A common stock (Employee Stock Purchase Plan) ‐ ‐ ‐
Repurchase of common stock ‐82.25 ‐56.03 ‐107.35
Payment of cash dividend ‐408.21 ‐ ‐41.02
Distribution to controlling interest ‐5.04 ‐ ‐5.62
Excess tax benefit from the exercise of stock options 0.48 2.43 2.54
Shares repurchased for tax withholdings on vesting of restricted stock ‐8.83 ‐13.65 ‐15.71
Payment of deferred consideration for prior business combination ‐ ‐6.71 ‐
Net cash flows from financing activities ‐487.96 ‐40.58 ‐138.52
Effect of foreign exchange rate changes on cash & cash equivalents ‐1.77 ‐1.95 ‐3.81
Net increase (decrease) in cash & cash equivalents ‐38.20 114.08 ‐36.55
Cash & cash equivalents at beginning of year 492.60 454.40 568.47
Cash & cash equivalents at end of year 454.40 568.47 531.93

Dolby Laboratories
Forecasted Cash Flow Statement
Fiscal Years Ending Sep 30 2016E 2017E 2018E 2019E 2020E
Cash flow from operations:
Net Income (loss) 183.32 184.75 186.12 190.07 196.55
Add Depreciation 72.56 69.72 68.36 68.29 69.38
Add Amortization 17.53 14.68 9.78 9.66 9.78
Changes :
Less Accounts Receivables -5.23 -6.44 -7.45 -7.85 -5.83
Less Inventory -2.40 -0.98 -1.13 -1.20 -0.89
Less Deferred Taxes -1.24 -1.12 -1.08 -3.11 -5.11
Less Prepaid Expenses & Other current assets -2.00 -1.63 -1.87 -2.08 -1.70
Add Accounts Payables -5.00 0.95 1.10 1.15 0.86
Add Accrued Liabililities -17.95 9.13 10.55 11.12 8.26
Add Deferred Revenue 3.28 1.34 1.55 1.63 1.21
Add Income Taxes Payable 1.46 0.02 0.02 0.05 0.08
Add Long Term Deferred Revenue -8.33 1.34 1.55 1.63 1.21
Net Cash flow from operating activities 236.01 271.75 267.49 269.37 273.80
Cash flow from investing:
Changes:
Less Short term investments -0.94 -0.95 -0.96 -0.96 -0.97
Less PP&E Gross -56.80 -62.14 -67.98 -74.36 -81.34
Less Long term investments -8.41 -8.63 -8.86 -9.09 -9.33
Less Goodwill 0.00 0.00 0.00 0.00 0.00
Less Other non current assets -1.41 -0.66 -0.76 -0.80 -0.59
Add Other non current liabilities -17.93 1.27 1.40 2.07 2.38
Net Cash flow from investing -85.50 -71.11 -77.15 -83.14 -89.85
Cash flow from financing:
Less Current Portion of LT debt 0.00 0.00 0.00 0.00 0.00
Add Long Term debt , net of current portion 0.00 0.00 0.00 0.00 0.00
Less Dividends -48.45 -48.89 -49.28 -50.34 -52.08
Add Common Stock (net of repurchase and ESOP) -8.41 -1.26 -0.19 -0.03 0.00
Net cash flow from financing -56.87 -50.15 -49.47 -50.37 -52.08
Change in cash 93.65 150.49 140.88 135.86 131.87
Beginning Cash 534.86 628.51 779.00 919.88 1055.73
Ending Cash 628.51 779.00 919.88 1055.73 1187.60

Dolby Laboratories
Common Size Balance Sheet
Assets:
Cash & cash equivalents 49.95% 59.20% 54.80% 61.64% 72.05% 79.83% 86.03% 92.57%
Net Cash & cash equivalents 49.95% 59.43% 55.10% 61.64% 72.05% 79.83% 86.03% 92.57%
Short-term investments 15.42% 24.08% 14.31% 13.71% 13.02% 12.30% 11.63% 11.20%
Accounts receivable, gross 10.77% 9.14% 10.62% 10.62% 10.62% 10.62% 10.62% 10.62%
Less: allowance for doubtful accounts 0.06% 0.17% 0.16% 0.15% 0.15% 0.15% 0.15% 0.15%
Accounts receivable, net 10.71% 8.97% 10.46% 10.47% 10.47% 10.47% 10.47% 10.47%
Raw materials 0.23% 0.11% 0.33% 0.45% 0.45% 0.45% 0.45% 0.45%
Work in process 0.00% 0.00% 0.34% 0.13% 0.13% 0.13% 0.13% 0.13%
Finished goods 0.88% 0.78% 0.76% 1.01% 1.01% 1.01% 1.01% 1.01%
Inventories 1.11% 0.89% 1.43% 1.60% 1.60% 1.60% 1.60% 1.60%
Deferred taxes 8.62% 9.00% 10.00% 9.67% 9.19% 8.68% 8.33% 8.24%
Prepaid expenses 1.12% 1.21% 1.41% 1.49% 1.49% 1.49% 1.49% 1.49%
Other current assets 1.54% 0.74% 0.78% 1.06% 1.06% 1.06% 1.06% 1.06%
Income tax receivable 0.87% 0.42% 1.12% 0.79% 0.75% 0.71% 0.68% 0.67%
Assets held for sale 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Prepaid expenses & other current assets 3.53% 2.38% 3.30% 3.34% 3.30% 3.26% 3.23% 3.22%
Total current assets 89.34% 104.76% 94.61% 100.42% 109.62% 116.14% 121.28% 127.30%
Long-term investments 33.68% 30.86% 33.07% 32.31% 31.27% 30.11% 29.01% 28.48%
Property, plant & equipment, gross 41.34% 48.03% 62.31% 64.88% 66.93% 68.70% 70.57% 73.85%
Less: accumulated depreciation 14.64% 17.85% 20.78% 26.89% 31.81% 35.78% 39.16% 42.87%
Property, plant, & equipment, net 26.70% 30.18% 41.53% 37.99% 35.12% 32.92% 31.41% 30.98%
Intangible assets, net 4.54% 6.63% 13.14% 10.79% 8.81% 7.42% 6.18% 5.15%
Goodwill 30.75% 28.91% 31.70% 30.18% 28.46% 26.70% 25.07% 23.99%
Deferred taxes 4.76% 4.35% 4.76% 4.51% 4.28% 4.05% 3.88% 3.84%
Other non-current assets 1.28% 0.94% 0.98% 1.07% 1.07% 1.07% 1.07% 1.07%
Total assets 191.05% 206.63% 219.78% 217.25% 218.64% 218.41% 217.90% 220.80%
Liabilities and Stockholder's equity
Current Liabilities:
Accounts payable 1.18% 1.66% 2.13% 1.54% 1.54% 1.54% 1.54% 1.54%
Accrued royalties 0.67% 0.26% 0.20% 0.32% 0.32% 0.32% 0.32% 0.32%
Amounts payable to joint licensing program partners 4.41% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Amounts payable to patent administration program partners 0.00% 4.52% 4.17% 4.35% 4.35% 4.35% 4.35% 4.35%
Accrued compensation & benefits 5.98% 7.46% 7.24% 6.02% 6.02% 6.02% 6.02% 6.02%
Accrued amounts payable to patent pool partners 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Accrued professional fees 0.48% 0.64% 0.67% 0.59% 0.59% 0.59% 0.59% 0.59%
Accrued current portion of litigation settlement 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Other accrued liabilities 3.61% 3.60% 5.16% 3.57% 3.57% 3.57% 3.57% 3.57%
Accrued liabilities 15.15% 16.49% 17.44% 14.84% 14.84% 14.84% 14.84% 14.84%
Income taxes payable 0.37% 0.27% 0.08% 0.22% 0.21% 0.20% 0.19% 0.19%
Current portion of long-term debt 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Deferred revenue 2.30% 1.30% 1.95% 2.18% 2.18% 2.18% 2.18% 2.18%
0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total current liabilities 19.00% 19.72% 21.60% 18.78% 18.77% 18.76% 18.75% 18.75%
Long-term debt, net of current portion 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Long-term deferred revenue 2.16% 2.01% 3.15% 2.18% 2.18% 2.18% 2.18% 2.18%
Deferred taxes 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Long-term portion of litigation settlement 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Supplemental retirement plan obligations 0.24% 0.25% 0.25% 0.23% 0.23% 0.23% 0.23% 0.23%
Non-current tax liabilities 3.41% 3.20% 6.47% 4.29% 4.07% 3.85% 3.69% 3.65%
Other liabilities 1.35% 1.10% 1.21% 1.28% 1.28% 1.28% 1.28% 1.28%
Other non-current liabilities 5.00% 4.55% 7.94% 5.80% 5.58% 5.36% 5.20% 5.16%
Total liabilities 26.15% 26.28% 32.69% 26.76% 26.53% 26.30% 26.13% 26.09%
Stockholder's Equity:
Common Stock 2.08% 4.84% 1.82% 0.91% 0.74% 0.68% 0.63% 0.61%
Retained earnings 159.88% 172.94% 185.53% 189.65% 191.23% 191.12% 190.66% 193.47%
Accumulated other comprehensive income 0.86% 0.31% ‐1.18% ‐1.12% ‐1.06% ‐0.99% ‐0.93% ‐0.89%
Total stockholders' equity - Doly Laboratories, Inc. 162.82% 178.09% 186.17% 189.43% 190.91% 190.80% 190.36% 193.18%
Controlling interest 2.08% 2.25% 0.92% 1.07% 1.20% 1.31% 1.41% 1.53%
Total stockholders' equity 164.90% 180.35% 187.09% 190.50% 192.10% 192.11% 191.77% 194.71%

Dolby Laboratories
Common Size Income Statement
Revenue:
Revenue ‐ licensing 88.72% 91.53% 89.44% 88.18% 86.63% 85.00% 83.86% 83.58%
Revenue ‐ product 8.86% 6.17% 8.64% 9.90% 11.29% 12.75% 13.83% 14.10%
Revenue ‐ services 2.42% 2.30% 1.92% 1.92% 2.08% 2.24% 2.32% 2.33%
Total revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of licensing 1.85% 1.13% 1.12% 1.34% 1.32% 1.30% 1.28% 1.27%
Cost of products 7.07% 4.70% 7.26% 7.92% 9.03% 10.20% 11.06% 11.27%
Cost of services 1.71% 1.48% 1.39% 1.33% 1.44% 1.55% 1.60% 1.61%
Gain from amended patent licensing agreement 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Impairment of products provided under operating leases 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total cost of revenue 10.63% 7.31% 9.77% 10.59% 11.79% 13.05% 13.94% 14.16%
Gross margin 89.37% 92.69% 90.23% 89.41% 88.21% 86.95% 86.06% 85.84%
Operating Expenses:
Research & development expenses 18.55% 19.07% 20.74% 20.74% 20.74% 20.74% 20.74% 20.74%
Selling, general & administrative expenses 43.21% 44.86% 47.53% 45.20% 45.20% 45.20% 45.20% 45.20%
Restructuring charges, net 0.65% 0.25% ‐0.01% 0.00% 0.00% 0.00% 0.00% 0.00%
Loss (gain) on settlements 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total operating expenses 62.41% 64.18% 68.26% 65.94% 65.94% 65.94% 65.94% 65.94%
Operating income 26.96% 28.51% 21.97% 23.47% 22.27% 21.01% 20.12% 19.90%
Interest income 0.42% 0.35% 0.47% 0.39% 0.37% 0.36% 0.34% 0.33%
Interest expense 0.06% ‐0.02% 0.02% 0.00% 0.00% 0.00% 0.00% 0.00%
Other income (expenses), net 0.23% ‐0.12% 2.90% 0.64% 0.64% 0.64% 0.64% 0.64%
Income (loss) before provision (benefit) for income taxes 27.55% 28.76% 25.32% 24.49% 23.28% 22.01% 21.10% 20.87%
Provision for income taxes 6.63% 7.02% 6.44% 6.52% 6.19% 5.85% 5.61% 5.55%
Net income (loss) including controlling interest 20.92% 21.74% 18.88% 17.98% 17.09% 16.15% 15.49% 15.32%
Less: net income (loss) attributable to controlling interest ‐0.11% ‐0.27% ‐0.19% ‐0.19% ‐0.19% ‐0.19% ‐0.18% ‐0.18%
Net income (loss) attributable to Dolby Laboratories, Inc. 20.81% 21.47% 18.69% 17.79% 16.90% 15.97% 15.30% 15.14%

Dolby Laboratories
Value Driver Estimation
Marginal Tax Rate Calculation:
Federal Statuatory rate 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00% 35.00%
State income taxes, net of federal effect 0.60% 0.60% 0.70% 0.70% 0.70% 0.70% 0.70% 0.70%
Foreign rate differential ‐4.50% ‐8.90% ‐9.10% ‐9.10% ‐9.10% ‐9.10% ‐9.10% ‐9.10%
Marginal Tax Rate 31.10% 26.70% 26.60% 26.60% 26.60% 26.60% 26.60% 26.60%
EBITA Calculations:
Net Sales 909.67 960.18 970.64 1019.69 1081.21 1152.31 1227.23 1282.87
Less COGS 96.72 70.18 94.82 108.00 127.49 150.37 171.07 181.63
Less SG&A 393.07 430.75 461.35 460.91 488.72 520.85 554.72 579.87
Less R&D Expsense 168.75 183.13 201.32 211.50 224.26 239.00 254.55 266.09
Add Implied Interest on operating leases 7.94 7.96 9.65 9.57 9.93 10.30 10.70 11.10
EBITA 259.08 284.08 222.80 248.84 250.68 252.38 257.59 266.38
Less Adjusted Income Taxes:
Provision for income taxes 60.34 67.38 62.54 66.44 66.95 67.45 68.88 71.23
Less Tax on Gain from amended patent licensing agreement 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Add Tax Shield on Impairment of products provided under operating leases 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Add Tax Shield on Restructuring charges, net 1.83 0.64 ‐0.02 0.00 0.00 0.00 0.00 0.00
Add Loss (gain) on settlements 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Less Interest income 1.20 0.89 1.21 1.05 1.08 1.10 1.12 1.14
Add Interest expense 0.18 ‐0.05 0.05 0.00 0.00 0.00 0.00 0.00
Less Other income (expenses), net 0.66 ‐0.31 7.50 1.73 1.84 1.96 2.09 2.18
Add Tax Shield on Implied lease interest 2.47 2.13 2.57 2.54 2.64 2.74 2.84 2.95
Adjusted income Taxes 62.97 69.51 56.43 66.19 66.68 67.13 68.52 70.86
Add Change in Deferred Taxes:
Change in DT ‐19.64 ‐6.70 ‐14.48 ‐1.24 ‐1.12 ‐1.08 ‐3.11 ‐5.11
NOPLAT : EBITA ‐ Adjusted Taxes + Change in DT
NOPLAT 176.47 207.88 151.89 181.41 182.87 184.17 185.96 190.42
Operating Current Assets:
Inventory Turnover (days) 50.56 48.45 43.13 50.93 47.98 43.25 40.50 40.24
Receivables Turnover (days) 31.87 38.13 39.47 42.29 42.87 43.59 44.20 44.75
Payables Turnover (days) 48.17 69.16 70.46 61.55 46.35 41.78 39.12 38.87
Working Capital Gap (INVT+ ART ‐APT) 34.26 17.42 12.13 31.67 44.51 45.06 45.57 46.12
Contingency operating period adjustment (days) 30 30 30 30 30 30 30 30
Operating Cash Assumption (%) : (Working capital gap + contingency adjustment) /
365 18% 13% 12% 16.90% 20.41% 20.56% 20.71% 20.85%
Operating Cash (operating cash assumption * BS cash (t‐1) 86.73 59.04 65.62 89.88 128.30 160.19 190.46 220.17
Accounts receivable, net 97.46 86.17 101.56 106.80 113.24 120.69 128.53 134.36
Inventories 10.09 8.54 13.87 16.27 17.25 18.38 19.58 20.47
Prepaid expenses & other current assets 32.12 22.88 32.03 34.03 35.66 37.53 39.61 41.31
Operating Current Assets 226.41 176.62 213.09 246.97 294.44 336.79 378.19 416.30
Operating Current Liabilities:
Accounts Payable 10.70 15.90 20.71 15.71 16.66 17.76 18.91 19.77
Accrued royalties 6.08 2.53 1.95 3.25 3.45 3.67 3.91 4.09
Amounts payable to joint licensing program partners 40.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Amounts payable to patent administration program partners 0.00 43.44 40.47 44.32 46.99 50.08 53.34 55.76
Accrued compensation & benefits 54.42 71.68 70.32 61.41 65.11 69.39 73.91 77.26
Accrued amounts payable to patent pool partners 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Accrued professional fees 4.40 6.16 6.52 5.97 6.33 6.74 7.18 7.51
Other Accrued Liabilities 32.80 34.57 50.05 36.42 38.62 41.15 43.83 45.82
Income taxes payable 3.39 2.60 0.75 2.22 2.23 2.25 2.30 2.38
Deferred revenue 20.93 12.50 18.91 22.19 23.53 25.08 26.71 27.92
Operating Current Liabilities 172.82 189.37 209.68 191.48 202.92 216.13 230.09 240.49
Other Operating Assets:
Intangible assets, net 41.32 63.70 127.51 109.98 95.30 85.51 75.86 66.08
Other non-current assets 11.64 9.05 9.46 10.87 11.53 12.29 13.09 13.68
PV of Opearting Leases 140.69 170.48 169.00 175.40 182.06 188.96 196.12 203.56
Other Operating Assets 193.64 243.23 305.97 296.25 288.88 286.76 285.07 283.32
Other Operating Liabilities:
Long-term deferred revenue 19.66 19.28 30.58 22.25 23.59 25.14 26.78 27.99
Non-current tax liabilities 30.99 30.72 62.84 43.72 44.06 44.39 45.33 46.87
Other liabilities 12.31 10.59 11.78 13.04 13.83 14.74 15.70 16.41
Other Operating Liabilities 62.96 60.59 105.21 79.01 81.48 84.27 87.80 91.27
PP&E (Net) 242.92 289.76 403.09 387.34 379.76 379.38 385.45 397.41
Invested Capital:
Invested Capital 427.19 459.65 607.26 660.07 678.68 702.53 730.81 765.27
Return on Invested Capital:
NOPLAT 176.47 207.88 151.89 181.41 182.87 184.17 185.96 190.42
Beginning Invested Capital 479.88 427.19 459.65 607.26 660.07 678.68 702.53 730.81
ROIC 36.77% 48.66% 33.04% 29.87% 27.71% 27.14% 26.47% 26.06%
Economic Profit: Begin IC * ( ROIC ‐WACC)
Beginning Invested Capital 479.88 427.19 459.65 607.26 660.07 678.68 702.53 730.81
ROIC 36.77% 48.66% 33.04% 29.87% 27.71% 27.14% 26.47% 26.06%
WACC 7.81% 7.81% 7.81% 7.81% 7.81% 7.81% 7.81% 7.81%
Economic Profit 138.99 174.51 115.98 133.98 131.32 131.16 131.09 133.34
FCF: NOPLAT+Change in Invested Capital
NOPLAT 176.47 207.88 151.89 181.41 182.87 184.17 185.96 190.42
Add: Beg Invested Capital 479.88 427.19 459.65 607.26 660.07 678.68 702.53 730.81
Less: Current Invested Capital 427.19 459.65 607.26 660.07 678.68 702.53 730.81 765.27
FCF 229.16 175.42 4.27 128.60 164.26 160.32 157.67 155.96

Dolby Laboratories
Key Management Ratios
Liquidity Ratios
Current Ratio (Current Assets/ Current Liabilities) 4.70 5.31 4.38 5.35 5.84 6.19 6.47 6.79
Operating Cash Flow Ratio (Operating CF/ Current Liabilities) 1.59 1.91 1.48 1.23 1.34 1.24 1.17 1.14
Quick Ratio (Cash and other liquid assets) / current liabilities 4.00 4.69 3.70 4.57 5.09 5.47 5.77 6.09
Activity or Asset‐Management Ratios
Asset Turnover Ratio (Sales/Total Assets) 0.52 0.48 0.45 0.46 0.46 0.46 0.46 0.45
Inventory Turnover Ratio (Sales/Total Inventory) 7.22 7.53 8.46 7.17 7.61 8.44 9.01 9.07
Receivables Turnover Ratio (Sales/Average Accounts Receivable) 11.45 9.57 9.25 8.63 8.51 8.37 8.26 8.16
Financial Leverage Ratios
Debt‐to‐Equity Ratio (Total Debt/Total Equity) 9.38% 9.84% 9.31% 9.03% 8.77% 8.54% 8.33% 8.15%
Equity Ratio (Total Equity/ Total Assets) 86.31% 87.28% 85.13% 87.68% 87.86% 87.96% 88.01% 88.18%
Interest Coverage (Operating Income) / (Interest Expense) 426.5426 ‐1495.73 1165.18 NA NA NA NA NA
Profitability Ratios
Return on Assets (Net Income/Total Assets) 10.95% 10.52% 8.59% 8.28% 7.82% 7.40% 7.11% 6.94%
Return on Equity (Net Income/Shareholders Equity) 12.78% 12.05% 10.04% 9.39% 8.85% 8.37% 8.04% 7.84%
Gross Margin (Revenue‐COGS)/Revenue 89.37% 92.69% 90.23% 89.41% 88.21% 86.95% 86.06% 85.84%
EBIT Margin (EBIT/Sales) 26.96% 28.51% 21.97% 23.47% 22.27% 21.01% 20.12% 19.90%
Profit Margin (Net Income/Sales) 20.81% 21.47% 18.69% 17.79% 16.90% 15.97% 15.30% 15.14%
Payout Policy Ratios
258.47% 27.18% 81.46% 55.64% 51.56% 50.83% 50.27% 49.50%
Payout Ratio (Dividend Payout Ratio) 215.05% 0.00% 22.60% 26.44% 26.44% 26.44% 26.44% 26.44%
Total Payout Ratio (Dividends paid + Repurchases)/NI

Weighted Average Cost of Capital (WACC) Estimation
Marginal Tax Rate 26.60%
Cost of equity Calculation
Risk Free Rate 2.62% (30 Yr Treasury Note)
+
Beta* 1.069
Market Risk Premium 5.00%
= Cost of Equity 7.97%
WACC Calculation All figures in millions
Shares outstanding* 101.035
MV of share 39.57
=Total MV of Equity [E] 3997.95
MV of debt [D] 169.00 Only Operating Leases as they don't have long term debt
Cost of Debt 5.66%
MV of equity 3997.95
+
MV of debt 169.00
= MV of the firm [V] 4166.95
Cost of Equity * 7.97%
(E/V) 95.94%
+
Cost of Debt * 5.66%
(1‐Marginal tax Rate) 73.40%
(D/V) 4.06%
= WACC 7.81%
Dolby Laboratories

Dolby Laboratories
Key Inputs:
     CV Growth 3.50%
     CV ROIC 26.06%
     WACC 7.81%
     Cost of Equity 7.97%
DCF Model
Discount period 1 2 3 4 5
NOPLAT 181 183 184 186 190
Continuing Value 3824
Free Cash Flow 129 164 160 158 156
Net FCF 129 164 160 3982
PV of free cash flows 119 141 128 2947
Value of Operations 3336
Non Operating Assets
Excess Cash 469
ST Instruments 139
LT Instruments 321
Controlling Interest 9
Value of Non Operating Assets 938
Non Operating Liabilities
PV of Operating Leases 169
Total Debt 0
PV of Pension Obligations 2
PV of employee stock options 114
Value of Non Operating Liabilities 286
Equity Value 3988
Shares outstanding 101
Intrinsic Share Price (FY 15 End) $39.47
Intrinsic Share Price (Today) $40.65
Current Share Price $39.57
EP Model
Periods to discount 1 2 3 4 5
Economic Profit 134 131 131 131 133
Continuing Value 3093
Net  EP 134 131 131 3224
PV of Economic Profit 124 113 105 2387
Initial Invested Capital 607
Value of Operations 3336
Non Operating Assets
Excess Cash 469
ST Instruments 139
LT Instruments 321
Controlling Interest 9
Value of Non Operating Assets 938
PV of Operating Leases 169
Total Debt 0
PV of Pension Obligations 2
PV of employee stock options 114
Value of Non Operating Liabilities 286
Equity Value 3988
Shares outstanding 101
Intrinsic Share Price (FY 15 end) $39.47
Current Share Price $39.57
Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation
Models

Dolby Laboratories
Period of Discount 1 2 3 4 4
EPS 1.82 1.83 1.84 1.87 1.93
Key Assumptions
   CV growth 3.50%
   CV ROE 7.84%
   Cost of Equity 7.97%
Future Cash Flows
     P/E Multiple (CV Year) 12.39
     EPS (CV Year) 1.93
     Future Stock Price 23.90
     Dividends Per Share 0.48 0.48 0.49 0.49
     Future Cash Flows 0.48 0.48 0.49 0.49 23.90
     Discounted Cash Flows 0.44 0.41 0.39 0.36 17.59
Intrinsic Share Price (FY 15 End) $19.20
Price Today $39.57
Dividend Discount Model (DDM) or Fundamental P/E
Valuation Model

Relative Valuation Models
Peer Comparison
EPS EPS
Ticker Company Price 2016E 2017E P/E 16 P/E 17
DTSI DTS, Inc $21.42 $2.14 $2.42 10.0         8.9
IMAX IMAX Corporation $30.75 $1.19 $1.42 25.8         21.7
Average 17.9       15.3
DLB Dolby Laboratories $39.57 $1.82 $1.83 21.8         21.6
Implied Value:
   Relative P/E (EPS16) $    32.54
   Relative P/E (EPS17) 27.90$
Industy Comparison
EPS EPS
Ticker Company Price 2016E 2017E P/E 16 P/E 17
DTSI DTS, Inc $21.42 $2.14 $2.42 10.0         8.9
IMAX IMAX Corporation $30.75 $1.19 $1.42 25.8         21.7
STRZA Starz Inc  Class A $25.73 $2.41 $2.93 10.7         8.8
HRS Harris Corp $76.99 $5.73 $6.17 13.4         12.5
IPGP IPG Photonics Corp $95.01 $4.88 $5.50 19.5         17.3
LGF Lions Gate Entertainment $20.91 $0.58 $1.41 36.1         14.8
DIS The Walt Disney Corporation $98.68 $5.84 $6.24 16.9         15.8
Average 18.9       14.2
DLB Dolby Laboratories $39.57 $1.82 $1.83 21.8         21.6
Implied Value:
   Relative P/E (EPS16) $    34.33
   Relative P/E (EPS17) 26.04$
Dolby Laboratories

Beta
$40.65 0.5 0.6 0.7 0.8 0.9 1 1.069 1.1 1.2 1.3 1.4 1.5
4.00% 137.74 104.02 84.15 71.06 61.78 54.87 51.04 49.51 45.24 41.76 38.87 36.43
4.25% 124.92 95.47 77.82 66.06 57.66 51.37 47.87 46.48 42.57 39.37 36.71 34.46
4.50% 114.40 88.31 72.45 61.78 54.12 48.35 45.14 43.86 40.25 37.30 34.83 32.74
4.75% 105.61 82.23 67.84 58.09 51.05 45.73 42.75 41.56 38.22 35.47 33.18 31.23
5.00% 98.15 77.00 63.84 54.87 48.35 43.42 40.65 39.54 36.43 33.86 31.72 29.90
Risk Premium 5.25% 91.74 72.45 60.34 52.03 45.97 41.37 38.79 37.75 34.83 32.43 30.41 28.70
5.50% 86.18 68.46 57.24 49.51 43.86 39.54 37.12 36.15 33.40 31.14 29.24 27.63
5.75% 81.30 64.93 54.49 47.26 41.96 37.91 35.62 34.71 32.12 29.98 28.19 26.66
6.00% 77.00 61.78 52.03 45.24 40.25 36.43 34.27 33.40 30.95 28.93 27.23 25.78
6.25% 73.16 58.96 49.81 43.42 38.70 35.08 33.04 32.22 29.90 27.97 26.36 24.98
6.50% 69.73 56.42 47.80 41.76 37.30 33.86 31.92 31.14 28.93 27.10 25.56 24.25
6.75% 66.64 54.12 45.97 40.25 36.01 32.74 30.90 30.15 28.04 26.30 24.83 23.58
Beta
$40.65 0.5 0.6 0.7 0.8 0.9 1 1.069 1.1 1.2 1.3 1.4 1.5
0.00% 42.96 39.80 37.15 34.88 32.94 31.24 30.19 29.75 28.44 27.26 26.21 25.26
0.50% 45.68 41.96 38.89 36.32 34.12 32.23 31.07 30.59 29.15 27.87 26.73 25.71
1.00% 49.07 44.60 40.99 38.01 35.51 33.38 32.09 31.54 29.95 28.55 27.32 26.21
1.50% 53.40 47.89 43.55 40.04 37.14 34.71 33.26 32.65 30.87 29.33 27.97 26.77
2.00% 59.14 52.10 46.74 42.51 39.10 36.29 34.63 33.94 31.94 30.22 28.72 27.41
CV NOPLAT 2.50% 67.11 57.69 50.83 45.61 41.50 38.19 36.26 35.47 33.18 31.24 29.57 28.12
Growth 3.00% 78.90 65.46 56.26 49.58 44.50 40.51 38.23 37.30 34.65 32.44 30.56 28.95
3.50% 98.15 77.00 63.84 54.87 48.35 43.42 40.65 39.54 36.43 33.86 31.72 29.90
4.00% 135.21 95.93 75.13 62.25 53.49 47.16 43.71 42.36 38.60 35.57 33.09 31.01
4.50% 236.07 132.72 93.75 73.29 60.69 52.15 47.70 45.98 41.32 37.67 34.74 32.33
5.00% 1584.61 235.12 130.26 91.60 71.48 59.16 53.11 50.83 44.83 40.30 36.76 33.92
CV NOPLAT Growth
$40.65 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00%
6.50% $35.17 $36.62 $38.34 $40.40 $42.91 $46.06 $50.10 $55.49 $63.04 $74.37 $93.24
6.75% $34.07 $35.38 $36.92 $38.76 $40.98 $43.72 $47.20 $51.74 $57.93 $66.88 $80.94
7.00% $33.05 $34.24 $35.63 $37.27 $39.24 $41.64 $44.65 $48.52 $53.68 $60.90 $71.72
7.25% $32.10 $33.18 $34.44 $35.91 $37.66 $39.79 $42.41 $45.73 $50.07 $56.00 $64.55
7.50% $31.21 $32.20 $33.34 $34.66 $36.23 $38.11 $40.41 $43.29 $46.99 $51.91 $58.81
7.75% $30.39 $31.29 $32.32 $33.52 $34.93 $36.60 $38.63 $41.14 $44.31 $48.46 $54.12
7.81% $30.20 $31.08 $32.09 $33.26 $34.63 $36.26 $38.23 $40.66 $43.72 $47.71 $53.12
8.00% $29.61 $30.43 $31.38 $32.46 $33.73 $35.23 $37.02 $39.22 $41.97 $45.50 $50.21
8.25% $28.88 $29.64 $30.50 $31.48 $32.63 $33.97 $35.57 $37.51 $39.90 $42.93 $46.89
WACC 8.50% $28.20 $28.89 $29.68 $30.57 $31.61 $32.82 $34.25 $35.97 $38.06 $40.68 $44.05
8.75% $27.55 $28.19 $28.91 $29.73 $30.67 $31.76 $33.04 $34.57 $36.42 $38.70 $41.59
9.00% $26.94 $27.53 $28.19 $28.94 $29.80 $30.79 $31.94 $33.30 $34.94 $36.94 $39.44
9.25% $26.36 $26.91 $27.51 $28.20 $28.98 $29.88 $30.92 $32.15 $33.60 $35.36 $37.54
9.50% $25.82 $26.32 $26.88 $27.51 $28.22 $29.04 $29.98 $31.08 $32.38 $33.94 $35.85
9.75% $25.30 $25.76 $26.28 $26.86 $27.51 $28.26 $29.11 $30.11 $31.27 $32.66 $34.34
10.00% $24.81 $25.24 $25.71 $26.25 $26.85 $27.53 $28.31 $29.21 $30.25 $31.49 $32.98
$40.65 $40.65
8% $41.08 75% $41.86
9% $40.77 75.50% $41.74
9.39% $40.65 76% $41.62
10% $40.46 76.50% $41.50
11% $40.14 Cost of 77% $41.38
P&E (Capex) 12% $39.81 Products 77.50% $41.26
13% $39.46 78% $41.14
14% $39.11 78.50% $41.01
15% $38.75 79% $40.89
16% $38.37 79.50% $40.77
17% $37.99 80% $40.65
18% $37.59 80.50% $40.53
19% $37.18
$40.65
40% 49.90
41% 48.12
42% 46.34
43% 44.56
44% 42.79
SG&A 45.20% 40.65
45% 41.01
46% 39.23
47% 37.45
48% 35.68
49% 33.90
50% 32.12

Present Value of Operating Lease Obligations & other obligations (2015) Present Value of Operating Lease Obligations & other obligations (2014)
Operating Operating
Fiscal Years Ending Sep 30 Leases Fiscal Years Ending Sep 30 Leases
2016 30.06 2015 31.26
2017 21.06 2016 20.50
2018 21.06 2017 20.50
2019 15.75 2018 14.45
2020 15.75 2019 14.45
Thereafter 134.40 Thereafter 145.73
Total Minimum Payments 238.096 Total Minimum Payments 246.876
Less: Interest 69 Less: Interest 76
PV of Minimum Payments 169 PV of Minimum Payments 170
Capitalization of Operating Leases Capitalization of Operating Leases
Pre‐Tax Cost of Debt 5.66% Pre‐Tax Cost of Debt 5.66%
Number Years Implied by Year 6 Payment 8.5 Number Years Implied by Year 6 Payment 10.1
Lease PV Lease Lease PV Lease
Year Commitment Payment Year Commitment Payment
1 30.063 28.5 1 31.258 29.6
2 21.0625 18.9 2 20.4985 18.4
3 21.0625 17.9 3 20.4985 17.4
4 15.7535 12.6 4 14.447 11.6
5 15.7535 12.0 5 14.447 11.0
6 & beyond 15.7535 79.2 6 & beyond 14.447 82.6
PV of Minimum Payments 169.0 PV of Minimum Payments 170.5
Present Value of Operating Lease Obligations & other obligations (2013) Present Value of Operating Lease Obligations & other obligations (2012)
Operating Operating
Fiscal Years Ending Leases #REF! Leases
2014 28.70 2013 17.58
2015 16.05 2014 17.09
2016 16.05 2015 17.09
2017 11.32 2016 12.58
2018 11.32 2017 12.58
Thereafter 121.73 Thereafter 132.40
Total Minimum Payments 205.168 Total Minimum Payments 209.315
Less: Interest 64 Less: Interest 69
PV of Minimum Payments 141 PV of Minimum Payments 140
Capitalization of Operating Leases Capitalization of Operating Leases
Pre‐Tax Cost of Debt 5.66% Pre‐Tax Cost of Debt 5.66%
Number Years Implied by Year 6 Payment 10.7 Number Years Implied by Year 6 Payment 10.5
Lease PV Lease Lease PV Lease
Year Commitment Payment Year Commitment Payment
1 28.696 27.2 1 17.583 16.6
2 16.048 14.4 2 17.0925 15.3
3 16.048 13.6 3 17.0925 14.5
4 11.3245 9.1 4 12.576 10.1
5 11.3245 8.6 5 12.576 9.5
6 & beyond 11.3245 67.9 6 & beyond 12.576 74.2
PV of Minimum Payments 140.7 PV of Minimum Payments 140.3

Effects of ESOP Exercise and Share Repurchases on Common Stock Balance Sheet Account and Number of Shares Outstanding
All figures are in millions
Number of Options Outstanding (shares): 8.84
Average Time to Maturity (years): 7.19
Expected Annual Number of Options Exercised: 1.23
Current Average Strike Price: 35.84$
Cost of Equity: 7.97%
Current Stock Price: $39.57
2016E 2017E 2018E 2019E 2020E
Increase in Shares Outstanding: 1.23 1.23 1.23 1.23 1.23
Average Strike Price: 35.84$             35.84$         35.84$          35.84$         35.84$
Increase in Common Stock Account: 44.05              44.05          44.05           44.05          44.05
Change in Treasury Stock 52.46 45.31 44.24 44.08 44.05
Expected Price of Repurchased Shares: 39.57$             42.72$         46.12$          49.80$         53.76$
Number of Shares Repurchased: 1.33                1.06            0.96             0.89            0.82
Shares Outstanding (beginning of the year) 101.04 100.94 101.11 101.38 101.72
Plus: Shares Issued Through ESOP 1.23 1.23 1.23 1.23 1.23
Less: Shares Repurchased in Treasury 1.33 1.06 0.96 0.89 0.82
Shares Outstanding (end of the year) 100.94 101.11 101.38 101.72 102.13

VALUATION OF OPTIONS GRANTED IN ESOP
All figures are in millions
Ticker Symbol DLB
Current Stock Price $39.57
Risk Free Rate 1.51%
Current Dividend Yield 1.26%
Annualized St. Dev. of Stock Returns 29.60%
Average Average B‐S Value
Range of Number Exercise Remaining Option of Options
Outstanding Options of Shares Price Life (yrs) Price Granted
$13.90 ‐ $24.59 0.022 18.39 0.50 21.07$        0$
$24.60 ‐ $28.90 1.876 27.82 4.70 14.83$        28$
$28.91 ‐ $33.40 1.647 30.48 6.70 14.53$        24$
$33.41 ‐ $37.33 0.248 35.09 6.30 12.40$        3$
$37.34 ‐ $47.45 4.981 40.55 8.40 11.78$        59$
$47.46 ‐ $58.07 0.041 49.00 3.60 5.61$          0$
$58.08 ‐ $62.29 0.020 59.69 5.20 5.08$          0$
Total 9 35.84$        7.19 15.06$        114$

Dolby_Laboratories_DLB

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