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Leases
 6 Months Ended
Mar. 31, 2023
Leases [Abstract]  
Leases Leases
As Lessee
As a lessee, we enter into contracts to access and utilize office space, including those payable to our principal stockholder and portions attributable to the noncontrolling interests in our consolidated subsidiaries. The following table presents the maturity analysis of lease liabilities (in thousands):
March 31, 2023
Operating Leases
Remainder of Fiscal 2023$7,240 
Fiscal 202413,622 
Fiscal 202510,138 
Fiscal 20266,314 
Fiscal 20273,993 
Thereafter11,505 
Total undiscounted lease payments52,812 
Less: imputed interest(4,944)
Total lease liabilities$47,868 
As Lessor
As a lessor, we lease our Dolby Cinema product solution to exhibitors. The terms of these leases are typically 10 years. Lease components consist of fixed payments and/or variable lease payments based on contracted percentages of revenue. Generally, leases do not grant any right to the lessee to purchase the underlying asset at the end of the lease term. Dolby Cinema lease arrangements have options to extend the lease term at expiration by increments ranging from 1 to 5 years.
Assets provided under an operating lease are carried at cost within property, plant, and equipment, net on the unaudited interim condensed consolidated balance sheets, and depreciated over the useful life of the asset using the straight-line method. Fixed operating lease payments are recognized on a straight-line basis over the lease term to revenue. Variable lease payments received under our Dolby Cinema operating leases are computed as shares of lessees' box office revenue and recognized to revenue in the period that box office sales occur. Lease incentive payments we make to lessees are amortized as a reduction in revenue over the lease term. The components of lease income were as follows (in thousands):
Fiscal Quarter EndedFiscal Year-To-Date Ended
March 31, 2023April 1, 2022March 31, 2023April 1, 2022
Operating Lease Income
Variable operating lease income$10,657 $6,409 $16,985 $14,477 
Fixed operating lease income781 691 1,528 1,547 
If a lease is classified as a sales-type lease, the carrying amount of the asset is derecognized from property, plant, and equipment, net, and a net investment in the lease is recorded. The net investment in the lease is measured at commencement date as the sum of the lease receivable and the estimated residual value of the equipment. The unguaranteed residual value of the equipment is determined as the estimated carrying value of the asset at the end of the lease term had the asset been depreciated on a straight-line basis. The unguaranteed residual value of sales-type leases was $1.0 million and $1.1 million as of March 31, 2023 and September 30, 2022, respectively. Selling profit or loss arising from a sales-type lease is recorded at lease commencement and presented on a gross basis. Over the term of the lease, we recognize interest income on the net investment in the lease, and variable lease payments, which are not included in the net investment in the lease. The variable lease payments are not material.
The following table presents the maturity analysis of fixed lease payments due to Dolby (in thousands):
March 31, 2023
Operating LeasesSales-Type Leases
Remainder of Fiscal 2023$54 $1,595 
Fiscal 2024798 795 
Fiscal 2025818 395 
Fiscal 2026732 395 
Fiscal 2027— — 
Thereafter— — 
Total undiscounted cash flows$2,402 3,180 
Less: Carrying value of lease receivables(487)
Difference$2,693 
Leases Leases
As Lessee
As a lessee, we enter into contracts to access and utilize office space, including those payable to our principal stockholder and portions attributable to the noncontrolling interests in our consolidated subsidiaries. The following table presents the maturity analysis of lease liabilities (in thousands):
March 31, 2023
Operating Leases
Remainder of Fiscal 2023$7,240 
Fiscal 202413,622 
Fiscal 202510,138 
Fiscal 20266,314 
Fiscal 20273,993 
Thereafter11,505 
Total undiscounted lease payments52,812 
Less: imputed interest(4,944)
Total lease liabilities$47,868 
As Lessor
As a lessor, we lease our Dolby Cinema product solution to exhibitors. The terms of these leases are typically 10 years. Lease components consist of fixed payments and/or variable lease payments based on contracted percentages of revenue. Generally, leases do not grant any right to the lessee to purchase the underlying asset at the end of the lease term. Dolby Cinema lease arrangements have options to extend the lease term at expiration by increments ranging from 1 to 5 years.
Assets provided under an operating lease are carried at cost within property, plant, and equipment, net on the unaudited interim condensed consolidated balance sheets, and depreciated over the useful life of the asset using the straight-line method. Fixed operating lease payments are recognized on a straight-line basis over the lease term to revenue. Variable lease payments received under our Dolby Cinema operating leases are computed as shares of lessees' box office revenue and recognized to revenue in the period that box office sales occur. Lease incentive payments we make to lessees are amortized as a reduction in revenue over the lease term. The components of lease income were as follows (in thousands):
Fiscal Quarter EndedFiscal Year-To-Date Ended
March 31, 2023April 1, 2022March 31, 2023April 1, 2022
Operating Lease Income
Variable operating lease income$10,657 $6,409 $16,985 $14,477 
Fixed operating lease income781 691 1,528 1,547 
If a lease is classified as a sales-type lease, the carrying amount of the asset is derecognized from property, plant, and equipment, net, and a net investment in the lease is recorded. The net investment in the lease is measured at commencement date as the sum of the lease receivable and the estimated residual value of the equipment. The unguaranteed residual value of the equipment is determined as the estimated carrying value of the asset at the end of the lease term had the asset been depreciated on a straight-line basis. The unguaranteed residual value of sales-type leases was $1.0 million and $1.1 million as of March 31, 2023 and September 30, 2022, respectively. Selling profit or loss arising from a sales-type lease is recorded at lease commencement and presented on a gross basis. Over the term of the lease, we recognize interest income on the net investment in the lease, and variable lease payments, which are not included in the net investment in the lease. The variable lease payments are not material.
The following table presents the maturity analysis of fixed lease payments due to Dolby (in thousands):
March 31, 2023
Operating LeasesSales-Type Leases
Remainder of Fiscal 2023$54 $1,595 
Fiscal 2024798 795 
Fiscal 2025818 395 
Fiscal 2026732 395 
Fiscal 2027— — 
Thereafter— — 
Total undiscounted cash flows$2,402 3,180 
Less: Carrying value of lease receivables(487)
Difference$2,693