Lake Technology has entered into a formal agreement with Dolby Laboratories with respect to royalty levels relating to Dolby Headphone and Dolby Virtual Speaker. Both of these products were developed by Lake Technology and licensed to Dolby.
Under the terms of the agreement, Dolby guarantees Lake Technology a minimum royalty payment of $400,000 per quarter for the six quarters beginning on September 30, 2002, through December 31, 2003. The agreement also sets an upper limit on the amount for this period of $500,000 per quarter.
Chris Gilbey, CEO of Lake Technology, said, "Once again, the strength of our relationship with Dolby and their commitment to Lake's success has been demonstrated. This guarantee helps us to focus our resources and gives us the stability to develop our nascent direct licensing and pro audio divisions. The actual royalties for the last three quarters has been below this guaranteed amount, so we have already derived significant benefit from this arrangement."
Previously reported, Ed Schummer, Dolby Laboratories' senior VP and general manager of the consumer division, said "Dolby Headphone is what we call an 'at-will' technology. Its revenue growth has already outpaced the rate of early growth of our own similar licensed-in, at-will technologies, such as Dolby Pro Logic. Peaks and troughs in such revenues are typical of the early stages of such technology adoption, and even at the mature stage, seasonal peaks and troughs took place and should be expected."