Exhibit 99.1
Sonic Solutions Reports Results for Third Quarter Ended December 31, 2004
NOVATO, Calif.--(BUSINESS WIRE)--Feb. 8, 2005--Sonic Solutions
(Nasdaq:SNIC)
Record Revenues and Strong Profitability (Non GAAP) Mark First
Quarter Report Post Roxio Acquisition
Sonic Solutions (Nasdaq:SNIC) announced today the financial
results for the Company's third quarter ended December 31, 2004.
Summary Financial Results
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
December 31, December 31,
2004 2004 2003 2004 2003
(Non GAAP) (GAAP) (GAAP) (GAAP) (GAAP)
--------- -------- -------- -------- --------
Net revenue $20,615 $19,677 $14,834 $55,023 $39,551
Net income (loss) $4,941 $(419) $3,208 $7,143 $6,748
========= ======== ======== ======== ========
Net income (loss) per
diluted share $0.18 $(0.02) $0.13 $0.25 $0.27
========= ======== ======== ======== ========
Summary
On a GAAP basis, net revenue for the quarter was $19,677,000
compared to $14,834,000 for the same period in the prior fiscal year.
Net loss for the quarter was $419,000 or $0.02 per diluted share
compared to net income of $3,208,000 or $0.13 per diluted share for
the same period in the prior fiscal year.
On a GAAP basis, net revenue for the nine months was $55,023,000
compared to $39,551,000 for the same period in the prior fiscal year.
Net income for the nine months was $7,143,000 or $0.25 per diluted
share compared to net income of $6,748,000 or $0.27 per diluted share
for the same period in the prior fiscal year.
On a Non GAAP basis, net revenue for the quarter was $20,615,000
and net income was $4,941,000 and net income per diluted share was
$0.18.
Non GAAP Presentation
During the quarter ended December 31, 2004, and as previously
announced, Sonic Solutions acquired substantially all of the assets
and liabilities of the Consumer Software Division of Roxio, Inc. This
press release discloses Non GAAP financial measures, including Non
GAAP net revenue, net income (loss), diluted earnings per share, and
gross profit and margin figures, which exclude certain expense items
associated with the acquisition and include certain royalty revenue
associated with the sale of Roxio product, each as more fully
described below. Sonic Solutions believes that this Non GAAP
presentation is useful to investors in analyzing the results for the
quarter ended December 31, 2004 because it includes certain items that
management considers meaningful and excludes other items that
management does not consider meaningful for purposes of analyzing
Sonic's operating results. Sonic Solutions plans to continue to
provide a Non GAAP presentation 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 Roxio's business may only be included in
revenue if they reflect OEM shipments occurring after the date of the
acquisition (December 17, 2004). The Non GAAP presentation includes in
revenue royalties for which Sonic received reports of shipments from
OEM's after December 17, 2004 for shipments prior to December 17, 2004
and for which Sonic has invoiced the OEMs and expects to collect the
amounts due in cash. Sonic has also excluded in the Non GAAP
presentation an end of life reserve related to some of the Roxio
products.
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 contracts, which are then amortized over various periods of
time. The GAAP presentation includes amortization on all acquired
intangibles. These non-cash charges are eliminated in the Non GAAP
presentation in calculating operating income.
Acquired in-process Technology - In the GAAP presentation, the
write-off of acquired in-process technology is included in operating
expenses. This expense has been eliminated in the Non GAAP
presentation.
Business Integration Expenses - Certain charges that occur at or
around the time of an acquisition, and that are not expected to recur,
are considered to be non-recurring charges. The Non GAAP presentation
eliminates any of these charges included in operating expense.
Sonic will hold its third quarter ended December 31, 2004 earnings
conference call on Tuesday, February 8, 2005 at 1:30 p.m. (PT)/4:30
p.m. (ET). 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)
(unaudited)
Three Months Nine Months
Ended Ended
December 31, December 31,
2004 2003 2004 2003
-------------------------------
Net Revenue $19,677 14,834 55,023 39,551
Cost of Revenue 2,497 1,734 5,997 5,135
------- ------ ------ ------
Gross Profit 17,180 13,100 49,026 34,416
------- ------ ------ ------
Operating expenses
Marketing and sales 4,553 3,304 12,151 9,286
Research and development 7,503 4,986 21,158 14,007
General and administrative 1,673 1,174 4,260 3,203
Acquired in-process technology 3,100 0 3,100 0
Business integration 1,087 0 1,087 0
------- ------ ------ ------
Total operating expenses 17,916 9,464 41,756 26,496
------- ------ ------ ------
Operating income (loss) (736) 3,636 7,270 7,920
Other income, net 365 101 596 102
------- ------ ------ ------
Income (loss) before income
taxes (371) 3,737 7,866 8,022
Provision for income taxes 48 529 723 1,274
------- ------ ------ ------
Net income (loss) $(419) 3,208 7,143 6,748
======= ====== ====== ======
Net income (loss) per share
applicable to common
Shareholders:
Basic ($0.02) $0.15 $0.31 $0.34
======= ====== ====== ======
Diluted ($0.02) $0.13 $0.25 $0.27
======= ====== ====== ======
Shares used in computing
net income (loss) per
share:
Basic 23,627 21,516 23,031 20,023
======= ====== ====== ======
Diluted 23,627 24,770 28,408 24,829
======= ====== ====== ======
Sonic Solutions
Condensed Balance Sheets
(in thousands)
December March
31, 31,
2004 2004(a)
(unaudited)
-------------------
Assets
Current assets:
Cash, cash equivalents and investments $29,214 $36,182
Accounts receivable, net of allowance for
returns and doubtful accounts of $243 and
$10,818, at March 31, 2004 and
December 31, 2004, respectively 14,790 9,443
Unbilled receivables 397 0
Inventory 1,350 560
Prepaid expenses and other current assets 3,283 1,399
---------- --------
Total current assets 49,034 47,584
---------- --------
Fixed assets, net 6,857 3,610
Purchased and internally developed software costs,
net 1,675 1,042
Acquired intangibles 50,065 2,898
Goodwill 54,236 15,533
Other assets 1,924 278
---------- --------
Total assets $163,791 $70,945
========== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $5,204 $1,145
Accrued liabilities 21,768 8,977
Deferred revenue and deposits 7,123 4,965
Capital leases 57 60
---------- --------
Total current liabilities 34,152 15,147
---------- --------
Bank note payable 30,000 0
Other long term liabilities 2,068 0
Capital lease, net of current portion 101 75
---------- --------
Total liabilities 66,321 15,222
Shareholders' equity:
Common stock 105,596 70,994
Cumulative foreign translation adjustment (14) (16)
Accumulated deficit (8,112) (15,255)
---------- --------
Total shareholders' equity 97,470 55,723
---------- --------
Total liabilities and shareholders' equity $163,791 $70,945
========== ========
(a) March 31, 2004 balances are derived from the audited financial
statements included in the Company's 2004 Annual Report on Form 10-K.
Sonic Solutions
Reconciliation of Reported Operating Results
to Non GAAP Operating Results:
(in thousands, except per share amounts and percentages, unaudited)
Three Months
Ended
December 31,
2004 2003
----------------
Reported revenue 19,677 14,834
Adjustment:
CSD Royalty reports received after December 17, 2004
for OEM shipments prior to December 17, 2004 731 -
CSD end of life reserve 207 -
----------------
Non GAAP revenue $20,615 $14,834
================
Non GAAP gross profit 18,444 13,100
Non GAAP gross margin 89.5% 88.3%
GAAP Operating income (loss) (736) 3,636
GAAP Net income (loss) (419) 3,208
Adjustments:
CSD royalty reports received after December 17, 2004
For OEM shipments prior to December 17, 2004 731 -
CSD end of life reserve 207 -
Acquired in-process technology 3,100 -
Business integration expenses 1,087 -
Amortization of intangible assets 326 134
Tax impact on Non GAAP adjustments (91) (59)
----------------
Non GAAP operating income (loss) basis $4,715 $3,770
================
Non GAAP net income (loss) basis $4,941 $3,283
================
Net income (loss) per diluted share
Non GAAP $0.18 $0.13
================
GAAP $(0.02) $0.13
================
Shares used in computing per share amounts 27,986 24,770
================
About Sonic Solutions (NASDAQ: SNIC - News)
Based in Marin County, California, Sonic Solutions (NASDAQ: SNIC)
(http://www.sonic.com/) is the leader in digital media software,
providing a broad range of interoperable, platform independent
software tools and applications for creative professionals, business
and home users, and technology partners. Sonic's products range from
advanced DVD authoring systems and interactive content delivery
technologies used to produce the majority of Hollywood DVD film
releases, to the award-winning Roxio- and Sonic-branded CD and DVD
creation, playback and backup solutions that have become the premiere
choice for consumers, prosumers and business users worldwide.
Sonic products are globally available from major retailers, online
at Sonic.com and Roxio.com, and are bundled with PCs, after-market
drives and consumer electronic devices. Sonic's digital media creation
engine is the de facto standard and has been licensed by major
software and hardware manufacturers, including Adobe, Microsoft,
Scientific-Atlanta, Sony, and many others. Sonic Solutions is
headquartered in Marin County, California.
Sonic, the Sonic logo, Sonic Solutions are trademarks or
registered trademarks of Sonic Solutions in the U.S. and/or other
countries. All other company or product names are trademarks of their
respective owners and, in some cases, are used by Sonic under license.
CONTACT: Sonic Solutions
A. Clay Leighton, 415-893-8000
clay_leighton@sonic.com
or
Market Street Partners
Carolyn Bass or Rob Walker, 415-445-3234
carolyn@marketstreetpartners.com
rwalker@marketstreetpartners.com