Elena Carr - Dolby Laboratories, Inc. Lewis Chew - Dolby Laboratories, Inc. Kevin J. Yeaman - Dolby Laboratories, Inc.

Mike J. Olson - Piper Jaffray & Co. Steven Frankel - Dougherty & Co. LLC Ralph E. Schackart - William Blair & Co. LLC James Charles Goss - Barrington Research Associates, Inc. Eric Wold - B. Riley Paul J. Chung - JPMorgan Securities LLC

Welcome to the Dolby Laboratories Conference Call discussing Fiscal Fourth Quarter Results. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. As a reminder, this call is being recorded, Wednesday, October 26, 2016. I would now like to turn the conference over to Elena Carr, Director of Corporate Finance and Investor Relations for Dolby Laboratories. Please go ahead, Elena. Elena Carr - Dolby Laboratories, Inc.: Good afternoon. Welcome to Dolby Laboratories' fourth quarter 2016 earnings conference call. Joining me today are Kevin Yeaman, Dolby Laboratories' President and CEO; and Lewis Chew, Executive Vice President and Chief Financial Officer. As a reminder, today's discussion will include forward-looking statements. These statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today. A discussion of some of these risks and uncertainties can be found in the earnings press release that we issued today under the section captioned Risk Factors, as well as in our most recent report on Form 10-Q. Dolby assumes no obligation and does not intend to update any forward-looking statements made during this call as a result of new information or future events. During today's call, we will discuss GAAP and non-GAAP financial measures, a reconciliation between the two is available in our earnings press release and in the Dolby Laboratories' Investor Relations Data Sheet on the Investor Relations section of our website. As for the content of this call, Lewis will begin with a recap of Dolby's financial results and provide our fiscal 2017 outlook, and Kevin will finish with a discussion of the business. So with that introduction behind us, I will now turn the call over to Lewis. Lewis Chew - Dolby Laboratories, Inc.: Thanks, Elena. And I still find it so impressive you can do that entire thing from memory. It's awesome. Anyway, good afternoon, everyone. We finished the year with Q4 revenue coming in at $233 million, which was about $3 million above the high end of our range. So as a result, full year FY 2016 revenue was $1.026 billion or 5.7% higher than FY 2015 revenue of $971 million. Let me go through our Q4 results in more detail and then I will provide an outlook for fiscal 2017. Fourth quarter revenue was comprised of $203 million in licensing and $30 million in products and services. As a reminder, we indicated last quarter that Q3 licensing revenue benefited from higher timing of payments compared to Q4, and that's the main reason behind the sequential decrease in licensing from Q3 to Q4. This affects our comparisons most notably in mobile and in PC and then, to a lesser extent, in the consumer electronics category. So here is my commentary on each of the key markets that we serve. I believe I said commentary when I meant category. Broadcast represented about 52% of total licensing in the fourth quarter. Revenues in this market were up sequentially by about 7% and also up year-over-year by about 12%. Both increases were driven by higher recoveries and higher volume in TVs, offset partially by lower volume in set-top boxes. PC revenues were about 14% of total licensing in the fourth quarter. PC licensing was down sequentially by about 38% and year-over-year by about 18%. Both trends were impacted by timing of payments that were shifted higher in Q3 versus Q4 of this year. We also had lower recoveries year-over-year. Mobile devices represented approximately 9% of licensing revenue in the fourth quarter. They were down sequentially about 59% and year-over-year around 27%. Both trends were due primarily to timing of payments. We anticipate that in Q1 FY 2017 mobile licensing will return to being about 12% or 13% of total licensing. Consumer electronics in the fourth quarter represented about 13% of total licensing. They were down about 23% sequentially due to timing of revenue, and year-over-year consumer electronics were about flat as we saw lower volume in DVD, Blu-ray and home-theater-in-a-box, offset by higher revenue from DMAs and sound bars. Licensing revenues in other markets comprised about 12% of total licensing in Q4. They were down sequentially by approximately 15% due mainly to seasonality. And year-over-year, other markets increased by about 10%, driven by higher revenue from Dolby Cinema and gaming. Products and services revenue was $30 million in Q4, which was up $5 million over Q3, by about the same as Q4 of last year. Let's review margins and operating expenses. Total gross margin in the fourth quarter was 87% on a GAAP basis and 88.2% on a non-GAAP basis. Product gross margin on a GAAP basis was 29.1% in the fourth quarter compared to 31.7% in Q3. And product gross margin on a non-GAAP basis was 35% in the fourth quarter compared to 39.2% in Q3, and the decrease in product margin was driven by higher warranty-related costs. Operating expenses in the fourth quarter on a GAAP basis were $173.7 million compared to $171.8 million in the third quarter. Operating expenses on a non-GAAP basis were $157 million in Q4, compared to $154.5 million in the third quarter. Operating income in the fourth quarter was $29.1 million on a GAAP basis or 12.5% of revenue, and $48.5 million on a non-GAAP basis or 20.8% of revenue. The effective tax rate for the fourth quarter was 21.9% on a GAAP basis and 23% on a non-GAAP basis. Net income in the fourth quarter was $23.9 million on a GAAP basis or 10.3% of revenue, and was $38.6 million on a non-GAAP basis or 16.6% of revenue. Diluted earnings per share in the fourth quarter on a GAAP basis were $0.23 compared to $0.62 in the third quarter and $0.45 in Q4 of last year. On a non-GAAP basis, fourth-quarter diluted earnings per share were $0.37 compared to $0.76 in Q3 and $0.43 in Q4 of last year. During Q4, we generated over $70 million in cash from operations and ended the quarter with a little over $1 billion in cash and investments. We bought back about 320,000 shares of our common stock in Q4, and had about $52 million of stock repurchase authorization remaining as we began fiscal 2017. We also announced today an increase in our quarterly cash dividend to $0.14 per common share, payable on November 16, 2016 to shareholders of record on November 7, 2016. Last quarter, the cash dividend was $0.12 per share. Before I give the FY 2017 outlook, let me take a minute to summarize the full year results for FY 2016. Total revenues were $1.026 billion, an increase of 5.7% over the prior year. Full year operating expenses on a GAAP basis were $685 million in FY 2016 compared to $663 million in FY 2015. Full year operating expenses on a non-GAAP basis were $611 million in FY 2016 compared to $588 million in FY 2015, an increase of 4% year-over-year. Full year operating income on a GAAP basis was $231.8 million or 22.6% and full year operating income on a non-GAAP basis was $316.6 million or 30.9%. Full year net income was $186 million on a GAAP basis and $249 million on a non-GAAP basis. Diluted earnings per share were $1.81 on a GAAP basis compared to $1.75 in FY 2015. And on a non-GAAP basis, it was $2.43 in FY 2016 compared to $2.21 in FY 2015. Now let me provide an outlook for fiscal 2017. For the full year, we estimate that total revenue will range from $1.060 billion to $1.090 billion. Within that, we estimate that licensing revenue will range from $950 million to $970 million and products and services will range from $110 million to $120 million. The growth that we are expecting in FY 2017 will be driven by new revenue streams, such as Dolby Cinema, Consumer Imaging and Dolby Voice, as well as higher revenue from mobile. This will be partially offset by declines in areas such as PCs, DVD, Blu-ray and home theater equipment. In the broadcast area, we are anticipating lower recoveries coming out of a stronger-than-typical year for recoveries in FY 2016. And that's offset by growth in Consumer Imaging. So, broadcast overall could be relatively flat in FY 2017, but still an important growth area for us over a longer timeframe. Gross margin is anticipated to range from 88% to 89% on a GAAP basis and about a point higher on a non-GAAP basis. This is a little lower than FY 2016 gross margin, due mainly to changes in our mix of revenue. Full year operating expenses are projected to range from $700 million to $710 million on a GAAP basis and from $625 million to $635 million on a non-GAAP basis. By the way, we grew revenue faster than expenses in FY 2016 and we expect that model to continue in FY 2017. Operating margin in FY 2016 was 22.6% on a GAAP basis and 30.9% on a non-GAAP basis. Our goal is to hold operating margins steady in FY 2017, with a chance to expand in future years, depending on the revenue growth rate that we can achieve. Non-operating income is estimated to be around $4 million in FY 2017 on both a GAAP and non-GAAP basis. The full year effective tax rate is estimated to be around 25%. Now let me finish with an outlook for the first quarter of FY 2017. Total revenue in Q1 is estimated to range from $250 million to $260 million. Within that, we estimate that licensing revenue will range from $220 million to $230 million, while products and services revenue is expected to be around $30 million. Gross margin in the first quarter is projected to range from 88% to 89% on a GAAP basis and 89% to 90% on a non-GAAP basis. Operating expenses in the first quarter are projected to range from $173 million to $177 million on a GAAP basis and from $154 million to $158 million on a non-GAAP basis. Other income in the first quarter is projected to be approximately $1 million. And our effective tax rate for the first quarter is estimated to be around 25% on both a GAAP and non-GAAP basis. Based on the combination of the factors I just went over, diluted earnings per share in the first quarter are projected to range from $0.34 to $0.40 on a GAAP basis and from $0.49 to $0.55 on a non-GAAP basis. And with that, I will now turn the call over to Kevin Yeaman. Kevin? Kevin J. Yeaman - Dolby Laboratories, Inc.: Thank you, Lewis, and good afternoon, everyone. Now that Lewis has been through the numbers for the quarter, I'd like to discuss the progress we've made this year. We entered the year with a focus on growing our leadership position in audio solutions for entertainment content and bringing audiovisual experiences to market that are new for us. Our progress is clear. We continue to grow the presence of Dolby Audio and Dolby Atmos in broadcast, mobile and online use cases. Dolby Vision is shipping in televisions globally and being adopted by an increasing number of partners. Dolby Cinema commitments grew significantly and deployments are accelerating. Dolby Voice is available through a growing number of partners. At the same time, we returned to revenue and earnings growth and we expect to deliver growth again in 2017. This year, we achieved a major milestone with the inclusion of Dolby Audio in iOS. Dolby Audio is integrated in Safari and iTunes and now Apple customers can enjoy content in Dolby Audio on the Apple TV, Mac, iPad and iPhone. In addition to Apple, Dolby Audio is integrated in mobile devices on models from Lenovo, LG and ZTE. During the year, Netflix, which was already streaming to a broad range of devices in Dolby Audio, began streaming Dolby Audio to mobile devices. In addition to Netflix, of the over 40 OTT providers streaming in Dolby, services from Apple, Tencent and ITE are also making Dolby Audio available to mobile devices. Going forward, we look to build on this momentum by expanding our presence with new and existing mobile device partners. We had another strong year in broadcast. Dolby Audio is an established format in developed markets like North America and Western Europe, and we are well positioned in areas like Africa, India and China, when the transition to digital broadcast is underway. Future growth in broadcast will come from the continued migration of emerging markets to digital televisions and the rollout of high-definition and 4K set-top boxes with Dolby Audio in both developed and emerging markets. During this past year, China Telecom and China Unicom rolled out services in Dolby, as did MultiChoice, a largest satellite operator in Africa. Of course, an increasing number of households are receiving content via DMAs. Dolby is included in devices like Apple TV and Amazon's Fire Stick and Fire TV. And just this quarter, Roku began shipping its Ultra player with Dolby Audio. We have also made progress in expanding the presence of Dolby Atmos. Dolby Atmos is installed or committed in over 2,400 cinematic screens, with about 550 Dolby Atmos titles announced or released. All major AVR manufacturers support Dolby Atmos. The first Dolby Atmos sound bars, from partners Samsung, Philips and Yamaha, hit the market this year and received great reviews. Five additional sound bars with Dolby Atmos will be reaching the market in late 2016 and early 2017. We now have a number of mobile devices available with Dolby Atmos. Just this quarter, LeEco announced that its flagship mobile phone will include Dolby Atmos, joining other key partners who feature Dolby Atmos on their phones and tablets, Lenovo and Amazon. Dolby Atmos content is available on Blu-ray and through a number of streaming services, and is in the process of being adopted by a number of pay-TV operators around the world. As we enter 2017, we see opportunities to expand the presence of the Dolby Atmos experience to a broad base of consumers. Overall, we continue to expand our leadership in audio entertainment experiences and create new opportunities for growth. Let me turn to our new initiatives; Dolby Vision, Dolby Cinema and Dolby Voice. Starting with Dolby Vision. It was less than a year ago that the first Dolby Vision television hit the market. Today, Dolby Vision TVs are available globally. LG, the second-largest TV manufacturer in the world, is including Dolby Vision on their full lineup of 2016 OLED and Super UHD LCD TVs. VIZIO, the second largest TV manufacturer in the U.S., is including Dolby Vision on their R, P and M Series with price points as low as $699. In China, TCL, the third-largest TV manufacturer in the world, and Skyworth, a leading TV manufacturer based in China, are shipping Dolby Vision TVs. And just last week, LeEco announced its first Dolby Vision TV, which will be available in China and in the U.S. starting in November. Also this quarter, we expanded our relationship with Google. Just this month, Google announced that the Chromecast Ultra will support Dolby Vision. This is the first DMA with Dolby Vision. And by the way, earlier this year, Google Play added Dolby Audio to its services. The amount of Dolby Vision content has grown throughout the year. Content is now coming from Warner Bros., Sony Pictures, MGM, Universal, Lionsgate, Netflix and Amazon Studios, available through our streaming partners, Netflix, Vudu and Amazon. So what does all this mean? We are well on our way to establishing that Dolby Vision is the best way to experience HDR content. Our job this year is to accelerate the deployment of Dolby Vision. We are seeing the number of TVs grow and there is an increasing amount of content. We also now see the use cases for Dolby Vision expanding outside of just TVs. This has also been a tremendous year for the adoption of Dolby Cinema, which combines the most powerful imaging and audio technology to deliver the ultimate cinema experience. We have added over 30 Dolby Cinema locations over the last year, with just over 40 operating today. The majority of these today are with AMC. We came into the year planning on 100 Dolby Cinema at AMC sites over seven years. We have accelerated and expanded on these plans. Now, AMC is targeting 100 Dolby Cinema locations by the end of calendar 2017, and we expect 160 by the end of calendar 2018. Outside of the U.S., we launched Dolby Cinema in China, the largest growing cinema market in the world. Wanda now has four Dolby Cinema locations open and has accelerated their rollout to 100 locations within the first two years of launch. Just a few months ago, Jackie Chan Cinemas opened its first Dolby Cinema at the highest grossing complex in China. Jackie Chan Cinemas plans on opening 10 more Dolby Cinema sites within the next two years. In total, we have about 300 Dolby Cinema locations open or committed around the world with our current exhibitor partners, AMC in the United States, Wanda and Jackie Chan in China, Vue in the Netherlands and Cineplexx in Austria. The content pipeline for Dolby Cinema is strong. In just over a year, there are over 50 theatrical titles with Dolby Vision and Dolby Atmos announced or released, with participation from every major studio. In the past quarter, the first Chinese movies optimized for Dolby Cinema were released. And we are excited to work more closely with China's movie industry to create a steady flow of local language content for Dolby Cinema. We enter 2017 focused on the rollout of Dolby Cinema around the world. With an outstanding reception from the industry and from consumers, we look forward to working with our partners to make the best movie-going experience more broadly available. Finally, let's talk about Dolby Voice. Our rollout of BT MeetMe with Dolby Voice has continued throughout the year. Last quarter, we announced and launched Dolby Voice with Highfive, a cloud-based collaboration and videoconferencing solution that is easy to install and easy to use. And this quarter, PGi, one of the largest providers of audio conferencing software and services, launched availability of Dolby Voice on its iMeet offering, a full video and screen-sharing chat solution. So during the year, we have significantly expanded our partner footprint and are focused on driving adoption of Dolby Voice and the Dolby Conference Phone. 2016 has been an important year for Dolby. We continue to expand our leadership in audio by broadening our presence across online, mobile and broadcast. Momentum is growing for the new experiences we have brought to market. We've significantly expanded the footprint of Dolby Cinema and the plans for future deployment. Dolby Vision TVs are now shipping globally and the first DMA with Dolby Vision is coming to market. And we are expanding the availability of Dolby Voice with new partners. All of this gives me confidence that we are doing what we need to drive long-term double-digit revenue and earnings growth. I look forward to updating you next quarter, and with that, I will turn it over to Q&A.

Thank you, ladies and gentlemen. Your first question comes from Mike Olson with Piper Jaffray. Mike J. Olson - Piper Jaffray & Co.: Hey, good afternoon. Just two questions. Can you say what new initiative revenue ended up at for fiscal 2016? I think you were shooting for somewhere around $20 million. And then what you are potentially expecting it to look like for 2017? And then, secondly, do you have any Dolby Digital patents that run out this year or in the near-term? And is there any potential impact on the business from that? Or are you basically covered because Dolby Digital Plus patents don't expire until later and that's what's taking over? We've gotten a few questions about that, so I was curious on how you are thinking about it. Thanks. Lewis Chew - Dolby Laboratories, Inc.: That was a good way to start it off, Mike, with a lot of stuff. Why don't I do this? This is Lewis. Let me give a recap of what we did on the new initiative revenue from a numbers standpoint, and then I will kick it over to Kevin to give some color behind that. For those on the call who don't remember, at the beginning of this fiscal year, we indicated that we thought we could get roughly $20 million from new revenue streams. And on top of that I indicated about $10 million from new patent revenue from patent acquisitions we made. So in reference to that $30 million in total, we came in just around that, just a little under that, but close enough for government work. So let me stop there, turn it over to you, Kevin, to give any color on that. Kevin J. Yeaman - Dolby Laboratories, Inc.: Right. So that is comprised of the new initiatives that I've been talking about. It's Dolby Vision. It's Dolby Voice. It's our Consumer Imaging, which includes both Dolby Vision and the licensing of our IP portfolio, including the patents that Lewis referenced. So we are pleased with where we came out. What I'm really pleased about is the progress and the momentum we have in each of these areas with the growing number of commitments, the growing availability of each of these solutions. We see much of our growth coming from these new initiatives this year. And in fact, I believe that we can grow the revenue from new revenue streams 2X to 3X a year for the next couple of years. On your second question, yeah, you know our plan here has always been to migrate the world to Dolby Digital Plus, to Dolby Atmos. That has been our offering as we've gone into digital broadcast and as we've gone into mobile. And so the adoption of our technologies in those markets, whether it's broadcast, whether it's mobile, online use cases, streaming, has been a big story for us for a couple of years. And that's what gives us confidence that we've managed the transition from optical disc to new use cases, including the offering of new and improved technologies that are more optimized for those use cases. And that's, of course, all reflected in the guidance that Lewis summarized. Mike J. Olson - Piper Jaffray & Co.: All right, thanks very much.

We will now move to Steven Frankel with Dougherty. Steven Frankel - Dougherty & Co. LLC: Good afternoon. Kevin, maybe we could start with the recent win at LeEco in mobile with Atmos. Maybe tell us what's the use case there and do you think you can convince other Android handset makers beyond the handful that you have today to follow their lead? Kevin J. Yeaman - Dolby Laboratories, Inc.: Well, the use case is an improved audio experience. It's louder and clear. It's a richer audio experience. We're seeing, of course, the – now that we're – we're now adopted throughout iOS and LeEco is the latest addition to our lineup. We're really excited to have them. And in fact our partnership with them has only deepened as we work with them on encoding their content in Dolby Audio, Dolby Vision in a TV coming out with them and Dolby Audio on mobile. So I believe we do expect growth in mobile this year, and that's because we see an opportunity to continue to have people adopt these improved experiences. We're also making it easier for people to get content to those devices. That's a big part of the value proposition. It's a big part of the promise which is now a reality, solidified by the fact that partners like Netflix have begun streaming those richer Dolby content streams to mobile devices, whereas they started with television and moved into PC. Now we've got the mobile devices with the content to really make it come to life. Steven Frankel - Dougherty & Co. LLC: Okay. And, Lewis, I don't want you to feel left out. So maybe you could just give us a little more detail on why the licensing business saw gross margin pressure in the quarter. And does that continue? And what does normalized CapEx look like, now that the building has been built and fully outfitted? Lewis Chew - Dolby Laboratories, Inc.: What you are saying is you gave Kevin the easy question and gave me the harder ones. Steven Frankel - Dougherty & Co. LLC: Would you expect anything different? Lewis Chew - Dolby Laboratories, Inc.: No. Okay. So actually from the standpoint of margins, they were pretty close to what we anticipated. Over time, we will keep updating you. I think I mentioned that even going forward into next year, we see mix affecting that. So, for example, we currently categorize our stream of ongoing revenue from Dolby Cinema within licensing and the other category. And it's fair to say that because of the way that business is structured we make investment, we have depreciation, that the margins would not be at the 98% – 97% level that you would see in pure licensing. So that does affect that. Also, we do have amortization of IP portfolio that we've acquired which also creates a slightly different margin structure. Those are probably the two primary things that are affecting the licensing margin. In terms of CapEx, we've been running – if I normalize what we've been doing for the regular business and set aside things for building improvements or whatever 20% to 30% a quarter, and I think that's not a bad model to use, but I will update you each quarter because the bulk of that really is driven on an ongoing basis by investments that we're making in Dolby Cinema. Our normal company CapEx has not changed dramatically in terms of equipment that we need for engineers and things of that nature. It's really that the new CapEx that we are funding is for investment in the Dolby Cinemas, which you are quite familiar with. Steven Frankel - Dougherty & Co. LLC: And in your guidance, how many cinemas do you think you'll have opened by Q4? Lewis Chew - Dolby Laboratories, Inc.: Well... Kevin J. Yeaman - Dolby Laboratories, Inc.: By Q4 of which...? Lewis Chew - Dolby Laboratories, Inc.: By next year? Kevin J. Yeaman - Dolby Laboratories, Inc.: By Q4 next year? Steven Frankel - Dougherty & Co. LLC: Yeah, next year. Kevin J. Yeaman - Dolby Laboratories, Inc.: Yeah. Well, yeah, I'd like to add 100 Dolby Cinema locations this year. Steven Frankel - Dougherty & Co. LLC: Great. Thank you. Lewis Chew - Dolby Laboratories, Inc.: All right.

We will now go to Ralph Schackart with William Blair. Ralph E. Schackart - William Blair & Co. LLC: Good afternoon. First question on licensing revenue growth, not sure if this is for Kevin or Lewis. But if we look at the guide at the midpoint, let's call it $960 million or so in licensing revenue, it's up roughly $40 million to $45 million year-over-year in terms of absolute dollar contribution. Should we look at that in the context, Kevin, with your comments, where that $20 million should perhaps double or go up 3X year-over-year? Kevin J. Yeaman - Dolby Laboratories, Inc.: Well, let me make sure I understand your question. So yeah, a lot of the growth is coming from the new initiatives, which is spread across – when you take each of the initiatives, it will be spread across broadcast, other – or some products, some mobile. It's spread across those areas and that's a big part of the growth in the audio part of the business. Like I said, I think – we see growth opportunities in mobile this year. And of course there's puts and takes. I mean, we still see the PC market being relatively weak, certain categories within CE, and then where we see opportunities, as I said, mobile. Also sound bars is a category where we see opportunity and an area where we have some momentum with Dolby Atmos. Ralph E. Schackart - William Blair & Co. LLC: And then any chance you can give us some color in terms of what the larger contributor of that sort of growth for 2017 would be in terms of Cinema, Voice or the Imaging and I guess mobile as well? Kevin J. Yeaman - Dolby Laboratories, Inc.: They are all contributing. That's the great thing about this. We came into the year with – without, actually, the first Dolby Vision TV having shipped yet and a handful of Dolby Cinema screens. And given the work we have done over this year to get more television for the market, get more cinemas in the market, get more Dolby Voice partners, we see all of those as contributors in 2017. Ralph E. Schackart - William Blair & Co. LLC: Okay. One last one, and just on broadcast, I want to make sure I understood that correctly. Were you calling for that total licensing stream from broadcast to be flat year-over-year? And then within that context, Imaging would be up, is that the correct interpretation? Lewis Chew - Dolby Laboratories, Inc.: Yeah, I think you got it. Ralph E. Schackart - William Blair & Co. LLC: Okay. Anything that would cause kind of that robust growth that we saw in 2016 to sort of playing out in 2017? Lewis Chew - Dolby Laboratories, Inc.: Please say that again. Ralph E. Schackart - William Blair & Co. LLC: Sure. So with broadcast growing in 2016 and then I guess my assumption, right or wrong, is that the line item will be flat 2017 over 2016, just curious what would sort of cause that sort of growth shift? Lewis Chew - Dolby Laboratories, Inc.: Yeah. So just as a reminder, I kind of – I tried to talk slowly during my prepared comments, Ralph. But we had a stronger-than-expected year for recoveries in broadcast. And so we are not baking in that level of strength in recoveries next year. So that's tampering down some of the normal organic growth and that's why I said longer term we do see broadcast as an ongoing growth area for us. FY 2017 is just coming off a – they actually beat their revenue targets for the year. Ralph E. Schackart - William Blair & Co. LLC: Okay. Thanks for the clarification.

We'll now go to Jim Goss with Barrington Research. James Charles Goss - Barrington Research Associates, Inc.: Thanks. The nature of your relationship with AMC and Dolby Cinema is sort of a joint venture, or something similar to what IMAX has done. Does that wind up getting some impact on both licensing and product sales when you do it that way? And does the domestic AMC relationship also characterize what you do with Wanda and other international markets? Lewis Chew - Dolby Laboratories, Inc.: Hey, Jim, this is Lewis. I'll take the first half, and then I'll let Kevin comment more broadly on the strategy. For the most part, we currently run the Dolby Cinema business as an ongoing stream of revenue. From time to time, there may be transactions that land as a one-time sale. But for the most part, we are currently viewing it as being an ongoing revenue stream, and we would classify that within licensing. James Charles Goss - Barrington Research Associates, Inc.: Okay. Lewis Chew - Dolby Laboratories, Inc.: So, Kevin, do you want to comment on – he asked about whether the AMC has any color on Wanda and whether there's any interplay between those two. Kevin J. Yeaman - Dolby Laboratories, Inc.: We are engaged with them independently. I would – obviously, they have a relation to one another. But they are both great strategic partners, from our point of view. And I mean, really I think we are fortunate to have started with Wanda in China and AMC as our anchor partners, both strong, growing companies who share our passion for investing in the best possible movie-going experience. James Charles Goss - Barrington Research Associates, Inc.: Okay. And is that JV relationship similar, U.S. and China? And is that – that's the pattern you would take? Kevin J. Yeaman - Dolby Laboratories, Inc.: Yeah. Let me just be clear in case – I don't want to create any confusion. I think JV or joint venture could be taken as some term of art that we don't intend. These are standard commercial relationships for – and we share in the box office revenue. And I would say structurally in that respect they are very similar in terms of one another. James Charles Goss - Barrington Research Associates, Inc.: Yeah. Okay. And to the extent that you now have these new features, does it portend maybe somewhat of a revival in any of the physical media of Blu-ray, whatever? Or do you think that really will not change the trend of streaming? Kevin J. Yeaman - Dolby Laboratories, Inc.: Well, clearly, as far as we're concerned, we want to improve the experience for consumers, whether they go to the movies, whether they like to own a Blu-ray Disc or whether they like to stream from their favorite streaming provider. So we are agnostic as far as that goes. And I will say that, yes, certainly there are a lot of people that still enjoy to get the Blu-ray quality experience, and those that provide those experiences are interested in us leveling that and taking advantage of all the premium features available on UHD televisions, including Dolby Vision and Dolby Atmos. James Charles Goss - Barrington Research Associates, Inc.: Okay. And then lastly, to the extent that the new initiatives are collectively maybe in the, say, a $30 million category that you are talking about, and there are several initiatives and they seem to overlap in a variety of the licensing revenue categories and then into maybe product sales. Is there a way to map like each of the Cinema, Vision and Voice in terms of where they might be almost in a different sort of matrix relative to the way you have categorized the revenues traditionally, just to, say, measure the progress in those areas? Lewis Chew - Dolby Laboratories, Inc.: Hey, Jim, this is Lewis. As you can imagine, for a number that relatively small against a $1 billion company, we don't have a map we can provide you. But generally, the revenues are landing in broadcast, mobile and other. And then, over time, I think we had said that as things like Dolby Cinema get larger, we would seek to get it large enough to be able to break that out for you separately. Right now, for example, Dolby Cinema is lumped in other. And then also for Dolby Voice, if we have sales of Dolby Conference Phone, that will show up in product sales. So right now it's really hard for us to try to get that level of detail out in a matrix, but we will try to make sure we keep providing you enough information so you can see where it's going. James Charles Goss - Barrington Research Associates, Inc.: Okay. I appreciate that and thank you. Lewis Chew - Dolby Laboratories, Inc.: All right.

We will now go to Eric Wold with B. Riley. Eric Wold - B. Riley: Thank you. Good afternoon. Another question I – two question, one on Dolby Cinema, a follow-up there. How do you think about the opportunity to sign other large players domestically with Dolby Cinema other than AMC? And maybe how – not trying to get granular in these conversations, but maybe how would you characterize those? And will it be any push-backs that others may have that AMC maybe didn't have? And then secondly, if you think about the cadence of license revenue this year, just confirming that we're going to see a similar spike in Q3 that we saw last year around mobile, PC and in consumer electronics with that new customer. If that's the case, should we expect a similar kind of quarter-to-quarter move between two, three and four? Or is there anything that would have been more unusual last year that won't repeat this year? Kevin J. Yeaman - Dolby Laboratories, Inc.: Do you want to take the second one and then I'll - Lewis Chew - Dolby Laboratories, Inc.: I will take the second one and you take the first one. Kevin J. Yeaman - Dolby Laboratories, Inc.: Well, why don't you go ahead and then I will come back? Lewis Chew - Dolby Laboratories, Inc.: All right. So let me take the first one. Yes. In fact even when we went over results for Q3 of this past year, Eric, I tried to signal that we would expect that. So now that I'm giving guidance for FY 2017 although I'll stop short of trying to break down the revenue by quarter because I don't think that's appropriate. We do expect an uplift in Q3 from the timing of revenues. And you used the word spike. I think that's probably not a bad word to use. But we will see a spike in Q3. And the size and nature of the spike, all else held equal, would be of similar scale to what we saw this year. Kevin J. Yeaman - Dolby Laboratories, Inc.: So, related to Dolby Cinema, so one thing you asked is, what do our partners see in us that others might not have? There's a certain element of timing as it relates to any of our offerings. We tend to partner up with companies that have made quality of experience a particular priority, what we're doing resonates with them. And whether you are talking about Dolby Cinema or what we're doing in mobile or what we're doing in broadcast, there are always some that are ready to go there. And both AMC and Wanda are tremendously aligned with us in terms of their belief that consumers – more people will go to the movies and for a better quality experience. In terms of how we're thinking about additional partners, I'll tell you, my first thought is that having come into the year with about 10 screens and now having commitments for about 300, my primary focus is getting as many of those as we can deployed in 2017, making sure they are a great experience, making sure that consumers know that it's the best way to see a movie. And I think if we keep doing that, then I expect we won't have trouble finding additional partners in the future. Eric Wold - B. Riley: Perfect. Thank you, guys.

And we'll move on to Paul Chung with JPMorgan. Paul J. Chung - JPMorgan Securities LLC: Hi. Thanks for taking my question. So a couple of them on new initiatives, on Cinema. Can you give us a sense of the unit economics, or is it still early to tell? Lewis Chew - Dolby Laboratories, Inc.: Hey, Paul. This is Lewis. It is too early to break that out because, as Kevin said, we were operating about 40 now. I'd say, as time goes along, when might I start thinking about doing that? I don't know. Let's get over the 100-screen mark and maybe we can think about that. But right now, there's such a wide range of economics between the different screens and it's a relatively small number of screens compared to the total plan we have. As Kevin said, we're now up to 300-ish that are committed, which is incredible considering that two years ago that number was zero. We'd like to get a little more critical mass before we start trying to break those unit economics out. Paul J. Chung - JPMorgan Securities LLC: Okay. So the pricing details can kind of change as the Cinemas kind of become validated and the profits come running in? Kevin J. Yeaman - Dolby Laboratories, Inc.: Well, if you're referring to Lewis' comments on volatility, I think that's just the natural – not all screens are the same in terms of their attendance and performance. They are coming in at different points in the year. Without a full year of box office, it's hard to do any valid comparisons. I think that's what – but the economics don't vary with a partner by – to that degree now. Paul J. Chung - JPMorgan Securities LLC: Okay. On Vision, should we expect any new material partnerships before CES of 2017? Kevin J. Yeaman - Dolby Laboratories, Inc.: Well, again, let me start by saying how pleased we are that we've gone from the first television hitting the market at the end of last calendar year to where we are today with a growing number of partners. We've added a couple of partners in China, so we're really getting that ecosystem up and going. So again, I'm going to – we did a lot of work in 2016 which we're going to be focused on getting to market in 2017, which is going to – which is going to – which is what's going to help us reach those 2X to 3X a year for the next couple of years on new initiatives. But absolutely, it's our goal to continue to spread the Dolby Vision experience. We've been focused very much on the high-end TV market. We're going to continue to be focused on that and look for new partners. We believe there could be opportunities this year to expand beyond TV. And so, we're very focused on that and making sure that we keep this momentum going, not just through 2017 but beyond 2017. Paul J. Chung - JPMorgan Securities LLC: Got you. And then last one from me, just going back to the patent expiry on Dolby Digital, what is the potential amount of revenue that could be lost in full year 2017 or 2018, or has – have most of those relationships been finished up with Dolby Digital Plus? Thank you. Kevin J. Yeaman - Dolby Laboratories, Inc.: We don't break out revenue by technology. I guess my answer to that question is that we have given our guidance. We are growing and we are making progress in all the ways that people are enjoying entertainment in the future, and we are doing it with new experiences like Dolby Audio and Dolby Atmos. Paul J. Chung - JPMorgan Securities LLC: Thank you.

We will take a follow-up from Steven Frankel with Dougherty. Steven Frankel - Dougherty & Co. LLC: Good afternoon. Kevin, I just want to follow-up on the comment you made about new use cases for Vision. Was that in reference to the Google DMA or is there something else that you might want to tell us about? Kevin J. Yeaman - Dolby Laboratories, Inc.: Well, so the DMA is our first Dolby Vision-capable device that is not a television. And look, I've said in the past, I think there are a lot of screens, entertainment screens beyond television that are going to benefit from HDR technologies. We are very focused right now on driving the successful results with the partners we have in the television space. But I don't have anything more specific other than to observe that as we go through 2017, we would like to find opportunities to provide this Dolby Vision experience even beyond the television use case. Steven Frankel - Dougherty & Co. LLC: Okay. And how many Vision SKUs are available today or by the end of this year? Kevin J. Yeaman - Dolby Laboratories, Inc.: Right now that the – we weren't – the SKU number is so – some people have one SKU for a model, and others, it might be five for what looks like the same TV. So I think the way to think about it is that, with LG, we are included on all of their 2016 OLED and Super HD models. That translates to some number of SKUs, but it means we are effectively across their UHD lineup. With VIZIO, we are on the top three out of their five lines. And in China, we have four partners, have each – are either in – just in market or soon coming to market with their first high-end models in Dolby Vision. Steven Frankel - Dougherty & Co. LLC: Okay. Thank you.

And there are no other questions at this time. Kevin J. Yeaman - Dolby Laboratories, Inc.: Great. Well, thanks, everybody, for joining us today. And we look forward to keeping you posted on our progress. Thank you.

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation.