Exhibit 99.1
Sonic Solutions Updates Financial Guidance
NOVATO, Calif.--(BUSINESS WIRE)--May 23, 2006--Sonic Solutions(R)
(NASDAQ:SNIC) management provided updated financial guidance during its fourth
quarter fiscal 2006 earnings conference call today.
Consistent with previous guidance, Sonic's management expects net revenue
to grow 20% to 25% for fiscal 2007, and that Sonic will continue to target
operating margins of 25% to 30% of net revenue. As management has discussed, the
Company should continue to exhibit a pronounced seasonal revenue pattern, with
the June and September quarters relatively lighter than the December and March
quarters.
For the first fiscal quarter ending June 30, 2006, management anticipates
net revenue, on a GAAP basis, will be between $36 million and $38 million; fully
diluted earnings per share will be between $0.11 and $0.14; and non-GAAP fully
diluted earnings per share will be between $0.13 and $0.16. Effective as of
April 1, 2006, the Company adopted Statement of Financial Accounting Standard
No. 123R ("SFAS 123R") "Share-Based Payments." The non-GAAP earnings per share
forecast for the quarter ending June 30, 2006 excludes the impact of the stock
option expense pursuant to SFAS 123R to be recorded in the income statement,
which the Company forecasts will be approximately $750,000 or $0.02 per fully
diluted share. Given the significance and non-cash nature of this expense,
management has excluded such expense from the non-GAAP earnings per share
guidance.
About Non-GAAP Financial Measures
To supplement the Company's updated financial guidance for the first
quarter ending June 30, 2006, management is providing high and low forecasts of
non-GAAP fully diluted earnings per share. The Company's management does not
itself, nor does it suggest that investors should, consider such non-GAAP
financial measure in isolation from, or as a substitute for, financial
information prepared and presented in accordance with GAAP. Management believes
the non-GAAP presentation is useful to investors because such presentation
excludes non-cash equity-based compensation expenses relating to SFAS 123R that
management does not consider meaningful for purposes of analyzing the Company's
core operating results and making budget-planning decisions. In addition, the
Company's financial results for the first quarter of fiscal 2006 did not include
non-cash equity-based compensation expenses; therefore the non-GAAP presentation
facilitates comparison of the Company's projections for the first quarter of
fiscal 2007 and the operating results for the first quarter of fiscal 2006. The
Company believes this non-GAAP financial measure is useful to investors in
allowing for greater transparency with respect to supplemental information used
by management in its financial and operational decision making.
Management uses this non-GAAP measure internally to plan and forecast
future periods, to establish operational goals, to compare with its business
plan and individual operating budgets on a consistent basis and to allocate
resources. The economic substance behind the decision to use this non-GAAP
measure is an increase of $0.02 per fully diluted share over the comparable GAAP
measure. Material limitations associated with the use of this measure versus the
comparable GAAP measure include the fact that the Company's competitors may not
use the same non-GAAP financial measures. Management compensates for these
limitations by providing full disclosure of the effects of this non-GAAP
measure, by presenting the corresponding GAAP financial measure in this release
and in the Company's financial statements and by providing a reconciliation to
the corresponding GAAP measure to enable investors to perform their own
analysis.
See the table below for the reconciliation of GAAP earnings per share and
non-GAAP earnings per share
Sonic Solutions
Reconciliation of GAAP earnings per diluted share to non-GAAP
earnings per diluted share
(unaudited)
First Quarter
Ending
June 30, 2006,
Low High
--- ----
Estimated GAAP earnings per diluted
share $0.11 $0.14
Estimated stock compensation expense
under SFAS123R, tax affected 0.02 0.02
-------------------
Estimated non-GAAP earnings per
diluted share $0.13 $0.16
===================
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 fourth quarter and fiscal year ended March
31, 2006, 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 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
next-generation high definition formats and channels. 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, 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 or prosecution and intellectual property claims; changes
in effective tax rates; 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
Fax: 415-893-8008
Email: clay_leighton@sonic.com
or
StreetSmart Investor Relations
Brooke Deterline, 415-893-7824
Anne Leschin, 415-775-1788
Email: investinsonic@sonic.com