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Business Combinations | 12 Months Ended
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Sep. 26, 2025
Business Combination [Abstract] |
Business Combination | Business Combinations Fiscal 2025 There were no business combinations entered into during fiscal 2025. Fiscal 2024 GE Licensing On August 19, 2024, we acquired 100% of the issued and outstanding equity interests of GE Intellectual Property Licensing, LLC and GE Technology Development, Inc., which, collectively with each of their subsidiaries, comprised General Electric’s intellectual property licensing business that primarily targeted the consumer digital media and electronics sectors ("GE Licensing" or the "acquiree"). The acquisition is an extension of our existing licensing businesses and is expected to strengthen and expand the scale of our intellectual property portfolio. The total consideration for the acquisition is comprised as the following (in thousands):
| Amount
Total amount paid for consideration | $ | 444,882 |
Less: Noncontrolling interest in Via LA | (9,921) |
Settlement of pre-existing relationship | (750) |
Total consideration transferred for acquisition of GE Licensing | 434,211 |
Less: Cash acquired | (2,232) |
Total consideration, net of cash acquired | $ | 431,979 |
Prior to the acquisition, GE Licensing held a noncontrolling interest in the Company’s majority owned subsidiary Via LA. The indirect acquisition of this noncontrolling interest was accounted for as a separate transaction under ASC 810. The difference between the fair value of the consideration paid of $9.9 million and the carrying amount of the noncontrolling interest acquired of $4.6 million was recognized as a $5.3 million adjustment to equity on the Company’s consolidated financial statements. We have accounted for the taxable transaction under the acquisition method of accounting for business combinations, and the results of operations of GE Licensing have been included in our consolidated statements of operations from the date of acquisition. Additionally, we have estimated the fair values of the net tangible and intangible assets acquired, and liabilities assumed as of the acquisition date, with any amounts paid in excess of the net assets recorded as goodwill. The fair values assigned to assets acquired and liabilities assumed were based on management’s estimates and assumptions. It is impracticable to provide historical supplemental pro forma financial information along with earnings during the period subsequent to the acquisition due to the lack of access to historical information. The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed (in thousands):
Recognized Identifiable Assets Acquired and Liabilities Assumed | Purchase Price Allocation
Cash and cash equivalents | $ | 2,232 |
Accounts receivable | 20,171 |
Other current assets | 9,636 |
Assets held for sale, current | 24,494 |
Long-term investments | 76,000 |
Intangible assets | 274,197 |
Goodwill | 75,387 |
Other non-current assets | 3,503 |
Other current liabilities | (15,370) |
Contingent liabilities | (14,199) |
Other non-current liabilities | (21,840) |
Purchase Consideration | $ | 434,211 |
We initially acquired certain assets valued at $18.2 million and increased the estimated fair value of the assets held for sale by $6.3 million for a total value of $24.5 million. These assets were classified as held for sale within prepaid expenses and other current assets on the consolidated balance sheets and are measured at fair value less cost to sell. During fiscal 2025, we sold $15.8 million of the assets classified as held for sale, and the remaining assets no longer met the criteria for held for sale, and as such, we reclassified $8.7 million in assets held for sale to short-term and long-term investments. Acquired contingencies relate to contingent payments due under an assumed agreement. The payments are contingent on the Company achieving certain revenue targets in the future and are based on a percentage of revenue that exceeds such targets. The Company determined that it is probable at the acquisition date that a liability has been incurred and the amount of the liability can be reasonably estimated in accordance with ASC 450. The Company recognized a contingent liability of $14.2 million on the acquisition date based on a discounted cash flow valuation technique. Goodwill is representative of our expectation of the benefits and synergies from the integration of GE Licensing operations and the associated assembled workforce, which does not qualify for separate recognition as an intangible asset. All of the goodwill recognized is expected to be deductible for income tax purposes. The following table summarizes the fair values allocated to the various intangible assets acquired and the weighted-average useful lives over which they will be amortized using the straight-line method:
| Purchase Price Allocation |  | Weighted-Average Useful Life |
Intangible Assets Acquired | (in thousands) |  | (in years) |
Patents and technology – HEVC Codecs | $ | 261,697 |  |  | 11 |
Patents and technology – non-HEVC Codecs | 12,500 |  |  | 11 |
Total | $ | 274,197 |  |  | 11 |
The value of acquired intangibles was determined based on the present value of estimated future cash flows using the multi-period excess earnings method with inputs such as projected revenue attributable to licensors in the patent pools, revenue retention rate, maintenance sales and marketing expenses, income tax rate, post-tax returns for contributory assets, and discount rate. Acquisition-related costs of $6.4 million were incurred during fiscal 2024. These acquisition-related costs were included in G&A expenses for $4.3 million and in S&M expenses for $2.1 million in the consolidated statements of operations. THEO Technologies On July 24, 2024, we completed the acquisition of all outstanding equity interests of THEO, a privately held company. THEO's products enable high-quality online video experiences for customers across sports and entertainment. This acquisition expands on our suite of cloud solutions to provide seamless, synchronized viewer experiences in sports and entertainment. We have included the financial results of THEO in our consolidated financial statements from the date of acquisition, and these results were not material. Additionally, the transaction costs associated with the acquisition were not material. The total purchase consideration of the acquisition was $58.7 million. We allocated $24.6 million in purchase consideration to identifiable intangible assets, which primarily consisted of customer relationships and developed technology, with estimated useful lives of 3 years to 13 years. We also recorded $39.9 million of goodwill, which is representative of our expectation of benefits and synergies from the integration of THEO technology with our existing technology and the assembled workforce of THEO. Fiscal 2023 MPEG LA On April 28, 2023, our wholly-owned subsidiary Via Licensing Corporation ("Via Corp") acquired 100% of MPEG LA, L.L.C. ("MPEG LA"), a privately held patent pool administrator that managed several collaborative licensing programs in video imaging and other technologies. In connection with the transaction, Via Corp changed its structure and name to Via LA and became a majority owned subsidiary of Dolby. The acquisition is expected to strengthen Via LA's licensing capabilities, particularly in video, diversify its revenues, and reinforce its ability to develop new patent licensing programs. The total consideration for the acquisition was as follows (in thousands):
| Amount
Cash | $ | 135,739 |
Noncontrolling interest in Via LA (24.8 million common equity units) | 24,815 |
Total amount paid to sellers | $ | 160,554 |
Less: amount deemed post-acquisition expense | (2,174) |
Total consideration paid to sellers | $ | 158,380 |
Assumed settlement of pre-existing relationships due to Dolby | 61,313 |
Total consideration | $ | 219,693 |
Less: unrestricted cash acquired | (80,633) |
Total consideration, net of unrestricted cash acquired | $ | 139,060 |
The noncontrolling interest in Via LA includes $3.6 million of cash held in escrow that was remitted to Dolby in exchange for Via LA common equity units 18 months after the transaction close date. The fair value of the noncontrolling interest was determined through the issuance of equity in lieu of cash. The assumed settlement of pre-existing relationships was determined based on the contractual amounts of payables and receivables between the parties as such amounts approximate fair value. We accounted for the taxable transaction under the acquisition method of accounting for business combinations, and the results of operations of MPEG LA have been included in the Company's consolidated statements of operations from the date of acquisition and were not material. Additionally, we estimated the fair values of the net tangible and intangible assets acquired, and liabilities assumed as of the acquisition date, with any amounts paid in excess of the net assets recorded as goodwill. The fair values assigned to assets acquired and liabilities assumed were based on management’s estimates and assumptions, and any changes to these fair values were not material. As this acquisition was not significant to our reported operating results, pro forma results of operations are not provided. The following table summarizes the acquisition date fair values allocated to the net assets acquired (in thousands):
Recognized Identifiable Assets Acquired and Liabilities Assumed | Purchase Price Allocation
Cash and cash equivalents | $ | 80,633 |
Restricted cash | 143,564 |
Other current assets | 73,556 |
Intangible assets | 86,000 |
Goodwill | 40,579 |
Other non-current assets | 34,298 |
Amounts payable to patent administrative program partners | (179,616) |
Other current liabilities | (21,709) |
Non-current liabilities | (37,612) |
Purchase Consideration | $ | 219,693 |
In connection with the preparation of our consolidated financial statements, we identified an immaterial error related to the acquisition date fair values allocated to net assets acquired, whereby we overstated certain accounts payable to patent administrative program partners and, as a consequence, correspondingly overstated goodwill as of the quarter ended June 30, 2023. We evaluated the error quantitatively and qualitatively, and determined that the related impact was not material to our condensed consolidated financial statements for the third quarter of fiscal 2023. Accordingly, we have revised the previously reported financial information for such immaterial error in the above table. The correction of this error resulted in a decrease to amounts payable to patent administrative program partners and a corresponding decrease to goodwill of $20.3 million, with no impact to total purchase consideration. Goodwill is representative of our expectation of the benefits and synergies from the integration of MPEG LA operations and the assembled workforce of MPEG LA, which does not qualify for separate recognition as an intangible asset. All of the goodwill recognized is expected to be deductible for income tax purposes. The following table summarizes the fair values allocated to the various intangible assets acquired and the weighted-average useful lives over which they will be amortized using the straight-line method:
| Purchase Price Allocation |  | Weighted-Average Useful Life |
Intangible Assets Acquired | (in thousands) |  | (in years) |
Licensor Relationships – AVC and Other | $ | 36,000 |  |  | 13 |
Licensor Relationships - HEVC | 31,000 |  |  | 10 |
Implementer Relationships – AVC and Other | 12,000 |  |  | 13 |
Implementer Relationships - HEVC | 7,000 |  |  | 10 |
Total | $ | 86,000 |  |  | 12 |
The value of acquired intangibles was determined based on the present value of estimated future cash flows using the following methodologies and inputs: •Licensor Relationships - the multi-period excess earnings method using inputs such as projected revenue attributable to licensors in the patent pools, revenue retention rate, maintenance sales and marketing expenses, income tax rate, post-tax returns for contributory assets, and discount rate. •Implementer Relationships - the distributor method using inputs such as projected revenue attributable to the existing implementers in the patent pools, distributor margin, income tax rate, and discount rate. Acquisition-related costs of $3.8 million were incurred during fiscal 2023. These acquisition-related costs were included in G&A expenses in the consolidated statements of operations.

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