Exhibit 99.1
Sonic Solutions Reports Results for Third Quarter Ended December 31, 2005;
Sonic Solutions Reports Record Revenues and Profits for its Fiscal Third Quarter
NOVATO, Calif.--(BUSINESS WIRE)--Feb. 8, 2006--Sonic Solutions
(NASDAQ:SNIC) today announced its financial results for the third quarter of
fiscal 2006. Quarterly revenues were a record $40.8 million, up 28% from $31.9
million in the second fiscal quarter of the year, and up more than 100% from
$19.7 million for the third quarter of fiscal 2005.
Operating income for the third quarter of fiscal 2006 was $9.3 million or
22.8% of revenue compared to $3.2 million or 10.1% of revenue for the second
quarter of fiscal 2006 and an operating loss of $0.7 million or 3.7% for the
third quarter of fiscal 2005. Net income grew to $8.2 million or $0.30 per share
in the third quarter of fiscal 2006 versus $3.1 million or $0.11 per share in
the second quarter of fiscal 2006 and net loss of $419,000 or $0.02 per share in
the third quarter of fiscal 2005.
Dave Habiger, President and Chief Executive Officer of Sonic, stated, "We
are pleased with the Company's results this quarter as we celebrated the one
year anniversary of the Roxio acquisition. We have begun to reap the rewards of
our investment and continue to see tremendous opportunity from the integration
of Sonic and Roxio. We are well positioned as the leading digital media software
provider for next-generation high definition formats and channels."
Sonic will conduct a conference call at 1:30 p.m. PST, or 4:30 p.m. EST,
today to discuss its financial results for the third quarter of fiscal 2006.
Investors are invited to listen to Sonic's quarterly conference call on the
investor section of the Company's website at www.sonic.com. A replay of the web
cast will be available approximately two hours after the conclusion of the call.
An audio replay of the conference call will also be made available approximately
two hours after the conclusion of the call. The audio replay will remain
available until February 15, 2006, at 9 p.m. PST and can be accessed by dialing
888-203-1113 and entering confirmation code 4639317.
Sonic Solutions
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts -- unaudited)
Three Months Ended Nine Months Ended
December 31, December 31,
2005 2004 2005(1) 2004
-------- -------- -------- --------
Net Revenue $ 40,774 $ 19,677 $108,241 $ 55,023
Cost of Revenue 9,435 3,008 26,353 6,980
-------- -------- -------- --------
Gross Profit 31,339 16,669 81,888 48,043
-------- -------- -------- --------
Operating expenses
Marketing and sales 7,751 4,553 23,628 12,151
Research and development 10,133 6,992 30,826 20,175
General and administrative 4,158 1,673 12,421 4,260
Business integration --- 1,087 336 1,087
Acquired in-process technology --- 3,100 --- 3,100
-------- -------- -------- --------
Total operating expenses 22,042 17,405 67,211 40,773
-------- -------- -------- --------
Operating income (loss) 9,297 (736) 14,677 7,270
Other income (expense), net (445) 365 (793) 596
-------- -------- -------- --------
Income (loss) before
income taxes 8,852 (371) 13,884 7,866
Provision (benefit) for income
taxes 651 48 (3,323) 723
-------- -------- -------- --------
Net income (loss) $ 8,201 $ (419)$ 17,207 $ 7,143
======== ======== ======== ========
Net income (loss) per share
Basic $ 0.33 $ (0.02)$ 0.70 $ 0.31
======== ======== ======== ========
Diluted $ 0.30 $ (0.02)$ 0.63 $ 0.27
======== ======== ======== ========
Shares used in
computing net income
(loss) per share
Basic 24,806 23,627 24,581 23,031
======== ======== ======== ========
Diluted 27,117 23,627 27,531 26,383
======== ======== ======== ========
(1) The condensed consolidated statement of operations for the nine
months ended December 31, 2005, reflects the impact of the additional
income tax benefit described below.
Sonic Solutions
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
2005
----------------------------
ASSETS March 31,(2) December 31,(3)
---------- ------------- ---------------
(unaudited)
Current Assets:
Cash and cash equivalents $ 35,436 $ 15,726
Short term investments --- 33,925
Accounts receivable, net of allowance
for returns and doubtful accounts of
$10,068 and $8,799 at March 31, 2005
and December 31, 2005, respectively 12,839 23,664
Inventory 755 687
Unbilled receivables 121 ---
Prepaid expenses and other
current assets 2,153 3,735
------------- -------------
Total current assets 51,304 77,737
Fixed assets, net 6,756 5,447
Purchased and internally developed
software costs, net 1,595 1,347
Goodwill 54,664 54,159
Acquired intangibles, net 49,046 45,115
Other assets 2,583 6,322
------------- -------------
Total assets $ 165,948 $ 190,127
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------
Current Liabilities:
Accounts payable $ 9,087 $ 6,123
Accrued liabilities 19,164 24,209
Deferred revenue 5,176 10,237
Obligations under capital
leases, current portion 84 48
------------- -------------
Total current liabilities 33,511 40,617
Bank note payable 30,000 30,000
Other long term liabilities, net
of current portion 2,217 172
Deferred revenue, net of current
portion 756 481
Obligations under capital leases,
net of current portion 41 3
------------- -------------
Total liabilities 66,525 71,273
------------- -------------
Shareholders' Equity:
Convertible preferred stock, no par
value, 10,000,000 shares authorized;
0 shares issued and outstanding at
March 31, 2005, and December 31,
2005, respectively --- ---
Common stock, no par value, 100,000,000
shares authorized; 24,308,730 and
24,832,986 shares issued and
outstanding at March 31, 2005
and December 31, 2005, respectively 106,410 109,256
Accumulated other comprehensive loss (274) (896)
Accumulated earnings (deficit) (6,713) 10,494
------------- -------------
Total shareholders' equity 99,423 118,854
------------- -------------
Total liabilities and shareholders'
equity $ 165,948 $ 190,127
============= =============
(2) The consolidated balance sheet at March 31, 2005 has been
derived from the Company's audited consolidated financial statements
on Form 10-K at that date, but does not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
(3) The consolidated balance sheet at December 31, 2005 reflects the
impact of the additional income tax benefit described below.
Increase in Historical Earnings due to Tax Benefit
As a result of the recent completion and filing of our fiscal 2005 federal
and California income tax returns, we have revised the amount of our Research
and Development tax credits. This revision increases our tax benefit and net
income for our first quarter of fiscal 2006 by $1,891,000 and increases earnings
per share for that quarter from the $0.15 previously reported to $0.21. The
impact of this revision is reflected in the results for the nine months ended
December 31, 2005 provided herewith. We plan to file amended Quarterly Reports
on Form 10-Q for the first and second quarters ended June 30, 2005 and September
30, 2005, originally filed with the Securities and Exchange Commission on August
15, 2005 and November 9, 2005, respectively, to reflect this change and to
restate the financial statements for those periods.
About Sonic Solutions
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 premier 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 personal computers ("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, and Roxio are trademarks or
registered trademarks of Sonic Solutions in the United States 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.
Forward-Looking Statements
This press release and Sonic's third quarter ended December 31, 2005
earnings conference call contain forward-looking statements that are based upon
current expectations. Such forward-looking statements include revenue and
earnings per share guidance for the fiscal quarter ending March 31, 2006, the
fiscal year ending March 31, 2006 and the fiscal year ending March 31, 2007; the
gross margin, operating margin, effective tax rate and cost of compliance with
the Sarbanes-Oxley Act of 2002, as amended ("SOX"), assumed for the guidance;
and views regarding the opportunities and benefits achieved through Sonic's
integration of the Roxio Consumer Software Division, as well as by deepening OEM
relationships, mobile entertainment developments, on-demand media business
models and next-generation high definition formats. These forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause the actual results to differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Important factors that could cause such differences include, but are
not limited to, Sonic's ability to successfully complete its integration of
Roxio's Consumer Software Division and former employees into Sonic's business
and realize the anticipated synergies and cost savings from the acquisition; the
timely introduction and acceptance of new products, including but not limited to
Sonic's high definition series products; the costs associated with new product
introductions and the possible adverse effect on gross margin; any fluctuation
in demand for Sonic products; the transition of products to new hardware
configurations and platforms; unforeseen increases in operating expenses, new
product introductions, cost of SOX compliance or business expansion; loss of
significant customers or key suppliers; risks related to acquisitions and
international operations; costs associated with the defense of litigation and
intellectual property claims; and other factors, including those discussed in
Sonic's annual and quarterly reports on file with the Securities and Exchange
Commission. This press release should be read in conjunction with Sonic's most
recent quarterly report on Form 10-Q and Sonic's other reports on file with the
Securities and Exchange Commission, which contain a more detailed discussion of
Sonic's business including risks and uncertainties that may affect future
results. Sonic does not undertake to update any forward-looking statements.
CONTACT: Sonic Solutions
A. Clay Leighton, 415-893-8000 (Chief Financial Officer)
Fax: 415-893-8008
clay_leighton@sonic.com
or
StreetSmart Investor Relations
Brooke Deterline, 415-893-7824
Anne Leschin, 415-775-1788
investinsonic@sonic.com