Exhibit 99.1
Sonic Solutions Reports Results For Fourth Fiscal Quarter Ended March
31, 2003
NOVATO, Calif.--(BUSINESS WIRE)--May 5, 2003--
Record Revenues; Sonic Reports EPS of $0.01 per Share (GAAP basis)
and $0.10 per Share (Non-GAAP basis) Exceeding Analyst Consensus
Sonic Solutions (Nasdaq:SNIC) announced today results for the
Company's fourth fiscal quarter ended March 31, 2003. A summary is
provided in the table below:
Summary Financial Results
(in thousands, except per share amounts and percentages)
Three Months Ended Twelve Months Ended
March 31, March 31,
2003 2003
(Non 2003 2002 (Non 2003 2002
GAAP) (GAAP) (GAAP) GAAP) (GAAP) (GAAP)
Net revenue $11,258 $9,467 $6,806 $35,609 $32,718 $19,104
Gross profit $ 9,490 $7,493 $5,155 $29,053 $25,271 $13,361
Gross margin 84.3% 79.1% 75.7% 81.6% 77.2% 69.9%
Operating
income (loss) $ 2,325 $ 328 $ 838 $ 6,565 $ 2,783 $(3,937)
Operating
margin 20.7% 3.5% 12.3% 18.4% 8.5% (20.6%)
Net income
(loss) per
diluted share $ 0.10 $ 0.01 $ 0.04 $ 0.32 $ 0.13 $ (0.30)
"Fiscal 2003 was a pivotal year for Sonic Solutions," commented
Bob Doris, Sonic's Chief Executive Officer and President. "Revenues
increased 71% over fiscal 2002, and the fourth quarter of fiscal 2003
marked the fifth consecutive profitable quarter for the Company. Over
the last year, Sonic completed two strategic acquisitions and entered
the retail distribution channel, solidifying our position as the
world's leading supplier of DVD creation software, and increasing our
OEM and end-user consumer customer base. We also laid the foundation
for entry of our technology into the consumer electronics venue. We
believe that Sonic is on an excellent trajectory, and that FY 2004
will be a year of continued growth and profitability."
GAAP Presentation
As reported under generally accepted accounting principles (GAAP),
net revenue for the quarter was $9,467,000 compared to $6,806,000 for
the same period in the prior fiscal year. Operating income for the
quarter was $328,000 and net income per diluted share was $0.01
compared to operating income of $838,000 and net income per diluted
share of $0.04 for the same period of the prior fiscal year.
Net revenue for the fiscal year was $32,718,000 compared to
$19,104,000 for the prior fiscal year. Operating income for the fiscal
year was $2,783,000 and net income per diluted share was $0.13
compared to an operating loss of $3,937,000 and net loss per diluted
share of $0.30 for the prior fiscal year.
Non GAAP Presentation
This press release includes a financial measure for income per
share that excludes certain charges and that has not been calculated
in accordance with GAAP. Sonic Solutions has provided this measurement
in addition to GAAP because the Company believes it provides a
consistent basis for comparison between reporting periods and is
helpful to understand the Company's underlying operational results.
This measure is provided as a complement to results provided under
GAAP and should therefore not be considered an alternative to GAAP.
This non GAAP measure may not be comparable to information provided by
other companies. The reconciliation of GAAP to non GAAP measurements
is set forth below.
As previously announced, Sonic Solutions closed the acquisition of
VERITAS Software's Desktop Mobile Division ("DMD") on December 18,
2002. During the December quarter Sonic Solutions introduced a non
GAAP presentation of its results which it plans to continue in future
quarters for as long as such a presentation continues to be
meaningful.
The non GAAP presentation adjusts the following items:
Revenue - Under purchase accounting rules, OEM royalties received
by Sonic on account of DMD's business may only be included in revenue
if they reflect OEM shipments occurring after the date of the
acquisition (December 18, 2002). The non GAAP presentation includes in
revenue royalties for which Sonic received reports of shipments from
OEMs after December 18, 2002 for shipments prior to December 18, 2002
and for which Sonic has invoiced the OEMs and expects to collect the
amounts due in cash.
Acquisition Related Intangible Amortization - Under purchase
accounting rules, some portion of the acquisition purchase price is
allocated to intangibles, such as core and developed technology and
customer relationships, which are then amortized over various periods
of time. These non-cash charges are eliminated in the non GAAP
presentation in calculating operating income.
Business Integration Expenses - Include certain charges that occur
at or around the time of an acquisition. The non GAAP presentation
eliminates any of these charges included in operating expense.
Under the non GAAP presentation, net revenue for the quarter was
$11,258,000. Operating income for the quarter was $2,325,000 and net
income per diluted share was $0.10.
June Quarter and Full Fiscal 2004 Guidance
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially.
For the full fiscal year 2004 (ending March 31, 2004), we are
reaffirming our prior guidance and expect GAAP revenues to range from
$51 million to $59 million, GAAP earnings per diluted share to range
from $0.47 to $0.53 cents per share and non GAAP earnings per diluted
share to range from $0.51 to $0.60 cents per share. For the first
fiscal quarter of 2004 (ending June 30, 2003), we forecast that
revenues will range from $11.0 million to $11.5 million, GAAP earnings
per diluted share will range from $0.06 to $0.08 cents per share and
non GAAP earnings per diluted share will range from $0.07 to $0.09
cents per share. The difference between the GAAP and non GAAP earnings
relates to the amortization expense on acquired intangibles from our
acquisitions which are deducted to calculate the GAAP earnings per
diluted share.
Investor Conference Call
Sonic will hold its fiscal fourth quarter 2003 earnings conference
call on Monday, May 5, 2003 at 2:00 p.m. (PDT)/5:00 p.m. (EDT).
Investors are invited to listen to Sonic's quarterly conference call
on the investor section of the Sonic Web site at www.sonic.com. A
replay of the call will also be available via Webcast at
www.sonic.com.
Sonic Solutions
Condensed Statement of Operations
(in thousands, except per share amounts)
Three Months Twelve Months
Ended Ended
March 31, March 31,
2003 2002 2003 2002 (a)
------- ------- ------- --------
Net revenue $ 9,467 $ 6,806 $32,718 $ 19,104
Cost of revenue 1,974 1,651 7,447 5,743
------- ------- ------- --------
Gross profit 7,493 5,155 25,271 13,361
Operating expenses
Marketing and sales 2,548 2,185 8,762 8,601
Research and development 3,825 1,542 10,625 5,897
General and administrative 792 590 3,101 2,095
Business integration 0 0 0 705
------- ------- ------- --------
Total operating expenses 7,165 4,317 22,488 17,298
Operating income (loss) 328 838 2,783 (3,937)
Other income (expense), net (70) 25 (47) (79)
------- ------- ------- --------
Income (loss) before
income taxes 258 863 2,736 (4,016)
Provision for income taxes 113 153 200 166
------- ------- ------- --------
Net income (loss) $ 145 710 2,536 ($4,182)
======= ======= ======= ========
Net income (loss) per share
applicable to common
shareholders:
Basic $ 0.01 $ 0.04 $ 0.15 ($0.30)
======= ======= ======= ========
Diluted $ 0.01 $ 0.04 $ 0.13 ($0.30)
======= ======= ======= ========
Shares used in computing
net income (loss)
per share:
Basic 17,564 14,722 16,391 14,157
======= ======= ======= ========
Diluted 20,807 18,909 19,311 14,157
======= ======= ======= ========
(a) March 31, 2002 balances are derived from the audited financial
statements included in the Company's 2002 Annual Report on Form 10-K.
Sonic Solutions
Condensed Balance Sheets
(in thousands)
March 31, March 31,
2003 2002 (a)
---------- ---------
Assets
Current assets:
Cash, cash equivalents and investments $ 9,708 $ 11,114
Accounts receivable, net of allowance
for returns and doubtful accounts of
$425 and $383, at March 31, 2003 and
March 31, 2002, respectively 5,823 3,143
Inventory 531 390
Prepaid expenses and other current assets 869 616
-------- --------
Total current assets 16,931 15,263
-------- --------
Fixed assets, net 1,745 1,123
Purchased and internally developed software
costs, net 920 719
Acquired intangibles 1,345 769
Goodwill 6,715 0
Other assets 697 604
-------- --------
Total assets $ 28,353 $ 18,478
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 7,087 $ 4,756
Deferred revenue and deposits 1,840 8,526
-------- --------
Total current liabilities 8,927 13,282
-------- --------
Shareholders' equity:
Common stock 45,765 31,240
Preferred stock 0 2,832
Accumulated deficit (26,339) (28,876)
-------- --------
Total shareholders' equity 19,426 5,196
-------- --------
Total liabilities and
shareholders' equity $ 28,353 $ 18,478
======== ========
(a) March 31, 2002 balances are derived from the audited financial
statements included in the Company's 2002 Annual Report on Form 10-K.
Sonic Solutions
Reconciliation of GAAP Operating Results
to Non GAAP Operating Results:
(in thousands, except per share amounts and percentages, unaudited)
Three Months Twelve Months
Ended Ended
March 31, March 31,
2003 2002 2003 2002
------- ------- ------- --------
Reported revenue 9,467 6,806 32,718 19,104
Adjustments:
DMD Royalty reports received
after December 18, 2002 for
OEM shipments prior to
December 18, 2002 1,791 - 2,891 -
----------------- -----------------
Non GAAP revenue $11,258 $ 6,806 $35,609 $19,104
================= =================
Reported gross profit 7,493 5,155 25,271 13,361
Adjustments:
DMD Royalty reports received
after December 18, 2002
for OEM shipments prior to
December 18, 2002 1,791 - 2,891 -
Cost of sales associated with
DMD royalty reports (51) - (73) -
Amortization of intangibles 257 220 964 909
----------------- -----------------
Non GAAP gross profit $ 9,490 $ 5,375 $29,053 $14,270
================= =================
Non GAAP gross margin 84.3% 78.9% 81.6% 74.7%
Reported operating
income (loss) 328 838 2,783 (3,937)
Adjustments:
DMD Royalty reports received
after December 18, 2002
for OEM shipments prior to
December 18, 2002 1,791 - 2,891 -
Cost of sales associated with
DMD royalty reports (51) - (73) -
Business integration expenses - - - 705
Amortization of intangible
assets 257 220 964 909
----------------- -----------------
Non GAAP operating income (loss) $ 2,325 $ 1,058 $ 6,565 $(2,323)
================= =================
Reported Net income (loss) 145 710 2,536 (4,182)
Adjustments:
DMD Royalty reports received
after December 18, 2002
for OEM shipments prior to
December 18, 2002 1,791 - 2,891 -
Cost of sales associated with
DMD royalty reports (51) - (73) -
Business integration expenses - - - 705
Amortization of intangible
assets 257 220 964 909
Foreign withholding taxes (100) - (100) -
----------------- -----------------
Non GAAP net income (loss)
basis $ 2,042 $ 930 $ 6,218 $(2,568)
================= =================
Net income (loss) per diluted
share
Non GAAP $ 0.10 $ 0.05 $ 0.32 $ (0.18)
================= =================
GAAP $ 0.01 $ 0.04 $ 0.13 $ (0.30)
================= =================
Shares used in computing
diluted per share amounts 20,807 18,909 19,311 14,157
================= =================
About Sonic Solutions (Nasdaq:SNIC)
Based in Marin County, California, Sonic Solutions
(http://www.sonic.com) is the world's leading supplier of DVD creation
software for professional, industrial and consumer applications. The
majority of major film releases on DVD have been produced on Sonic's
professional DVD authoring systems in studios around the world.
Sonic's MyDVD(R) and DVDit!(R) are the most widely used DVD creation
applications by consumers and video enthusiasts and are the solutions
of choice among the key PC and after-market drive suppliers. Sonic's
RecordNow is a leading solution for audio and data mastering. Sonic's
AuthorScript, the DVD and CD formatting and burning engine that
underlies Sonic's applications, is the most widely deployed DVD
software engine and has been licensed by Adobe, Microsoft, Sony, and
many others.
Forward-Looking Statements
The above paragraphs of this press release may containing
forward-looking statements that are based upon current expectations.
Actual results could differ materially from those projected in the
forward-looking statements as a result of various risks and
uncertainties including, among others, the timely introduction and
acceptance of new products, costs associated with new product
introductions, the transition of products to new hardware
configurations and platforms and other factors, including those
discussed in the Company's annual and quarterly reports on file with
the Securities and Exchange Commission. This press release should be
read in conjunction with the Company's most recent annual report on
Form 10-K, Form 10-Q and Registration Statement on file with the
Securities and Exchange Commission, which contain a more detailed
discussion of the Company's business, including risks and
uncertainties that may affect future results. The Company does not
undertake to update any forward-looking statements.
Note to Editors: Sonic, the Sonic logo, Backup MyPC, CinePlayer,
DVD PrePlay, DVD Producer, Edit-on-DVD, OpenDVD, PrimeTime, RecordNow
and Simple Backup are trademarks of Sonic Solutions. AuthorScript,
AutoDVD, DVD-Audio Creator, DVD Creator, DVDit!, DVD Fusion, MyDVD,
NoNOISE, ReelDVD, Scenarist and Sonic Solutions are registered
trademarks of Sonic Solutions. All other company or product names are
trademarks of their respective owners and, in some cases, are used by
Sonic under license. Specifications, pricing and delivery schedules
are subject to change without notice.
CONTACT: Sonic Solutions
A. Clay Leighton, 415/893-8000
clay_leighton@sonic.com
or
Market Street Partners
Carolyn Bass/Rob Hawkins, 415/321-2455
carolyn@marketstreetpartners.com
rob@marketstreetpartners.com