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The Honolulu Advertiser

Posted on: Thursday, February 17, 2005

Dolby raises $495M in public offering

By Brett Cole
Bloomberg News Service

NEW YORK — Dolby Laboratories Inc., a developer of music and motion picture sound systems, raised $495 million in an initial public offering, making founder Ray Dolby a billionaire.

Dolby Laboratories sold 10.5 million Class A shares at $18 each, while its founder sold 17 million shares, the San Francisco-based company said yesterday. Dolby boosted the offering price from its previously estimated $13.50 to $15.50 range.

The company developed a system in the 1960s that reduced background noise in tape recordings. In the 1970s, the Dolby surround-sound system was used in theaters for films including "Star Wars." Dolby products have been used in the production of more than 16,000 movies, thousands of DVD titles and hundreds of video games, the company said.

Ray Dolby, 71, founded the company in London in 1965 after he received a doctorate in physics from Cambridge University. He is board chairman and received $306 million from the IPO.

Ray Dolby's share in the company is worth $1.2 billion based on his 69.8 percent stake in the stock following the share sale. The company's market value is $1.75 billion based on its 97,362,125 Class A and Class B shares at $18 each.

Control of the company will remain with Ray Dolby after the IPO through his holding of Class B shares, which are entitled to 10 votes a share. Class A shares are allowed one vote each. Ray Dolby's voting power is 93.6 percent, according to an SEC filing.

Ray Dolby and Ioan Allen, the company's senior vice president, won Academy Awards in 1978 and 1988 for their efforts to develop motion-picture sound.

In the 12 months ended Sept. 24, Dolby Laboratories had net income of $39.8 million on sales of $289 million, compared with net income of $30.9 million on sales of $217.5 million in the same period a year earlier. The company manufactures its products in Brisbane, Calif., and in Wootton Bassett, England.

Dolby Laboratories licenses its sound technology to consumer electronic product manufacturers, which incorporate them in DVD players, home theater systems, televisions, video games and personal computers. The company is entitled to a royalty payment for every product that uses its technology.

Dolby shares will trade on the New York Stock Exchange under the symbol "DLB."