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	$	443,565
Less: Noncontrolling interest in Via LA	(9,921)
Settlement of pre-existing relationship	(750)
Total consideration transferred for acquisition of GE Licensing	432,894
Less: Cash acquired	(2,232)
Total consideration, net of cash acquired	$	430,662

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 are based on management’s estimates and assumptions and may be subject to change as additional information is received and certain tax returns are finalized, including potential changes to income tax-related accounts and certain assets held for sale. We expect to finalize the valuation within the one year measurement period.

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.


Recognized Identifiable Assets Acquired and Liabilities Assumed	Purchase Price Allocation (Preliminary)
Cash and cash equivalents	$	2,232
Accounts receivable	20,135
Other current assets	9,636
Assets held for sale, current	18,231
Long-term investments	76,000
Intangible assets	274,197
Goodwill	80,763
Other non-current assets	3,503
Other current liabilities	(15,765)
Contingent liabilities	(14,199)
Other non-current liabilities	(21,839)
Purchase Consideration	$	432,894

We acquired certain assets valued of $18.2 million as part of the acquisition which we plan to sell shortly after the acquisition date. These assets are 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.

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 preliminary 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 preliminary value of acquired intangibles was determined based on the present value of estimated future cash flows using the multi-period excess earnings method with the following 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.

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.

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 will be fully remitted to Dolby in exchange for Via LA common equity units after 18 months from 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.


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 & Other	$	36,000	13
Licensor Relationships - HEVC	31,000		10
Implementer Relationships – AVC & Other	12,000		13
Implementer Relationships - HEVC	7,000		10
Total	$	86,000	12

•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.

On January 31, 2022, we completed the acquisition of all outstanding interests of Millicast, a privately held company. Following the acquisition, Millicast is expected to enable developers to take the interactive events they build with Dolby.io, and stream them from the presenter to large audiences. We have included the financial results of Millicast 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 $38.8 million. We allocated $8.7 million in purchase consideration to identifiable intangible assets, which primarily consisted of developed technology, with estimated