Exhibit 99.1
Sonic Solutions Updates Financial Guidance
NOVATO, Calif.--(BUSINESS WIRE)--Nov. 8, 2006--Sonic Solutions(R)
(NASDAQ:SNIC) management provided updated financial guidance during its second
quarter ended September 30, 2006 earnings conference call today.
For the third fiscal quarter ending December 31, 2006, management
anticipates net revenue, on a GAAP basis, will be between $39 million and $43
million; fully diluted earnings per share will be between $0.14 and $0.21; and
non-GAAP fully diluted earnings per share will be between $0.19 and $0.26. As of
April 1, 2006, Sonic adopted Statement of Financial Accounting Standard No. 123R
("SFAS 123R"), "Share-Based Payments." The non-GAAP earnings per share forecast
for the third quarter ending December 31, 2006 excludes the impact of the stock
option expense pursuant to SFAS 123R, the amortization of acquired intangibles
expense to be recorded in the income statement, and the one time write off of
acquired in-process technology expense associated with the acquisition of
SystemOK, which Sonic forecasts will be approximately $0.02, $0.05 and $0.02 per
fully diluted share, respectively, before being adjusted for income taxes. Given
the significance and non-cash nature of these expenses, and for the reasons set
forth below, management has excluded such expenses from the non-GAAP earnings
per share guidance.
Additionally, Sonic's management expects net revenue to grow by 20% or more
during the Company's 2008 fiscal year, with seasonal revenue patterns consistent
with those experienced in prior years.
About Non-GAAP Financial Measures.
To supplement Sonic's updated financial guidance for the third quarter
ending December 31, 2006, management is providing high and low forecasts of
non-GAAP fully diluted earnings per share. Management does not itself, nor does
it suggest that investors should, consider such non-GAAP financial measures in
isolation from, or as a substitute for or superior to, 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
expenses of equity-based compensation relating to SFAS 123R, amortization on
acquired intangibles, and the one time write off of acquired in-process
technology expense, which offers investors a better understanding of Sonic's
core operating results and budget-planning decisions. The excluded expenses do
not result in ongoing cash expenditures and, in management's view, do not
otherwise have a material impact on Sonic's ongoing operations. In addition,
Sonic's financial results for the third quarter ended December 31, 2005 did not
include non-cash equity-based compensation expenses; therefore the exclusion of
non-cash expenses of equity-based compensation facilitates comparison of Sonic's
projections for the third quarter ending December 31, 2006 and the operating
results for the third quarter ended December 31, 2005. Additionally, the
exclusion of the one time write off of acquired in-process technology expense
improves the comparability to our results for the third quarter ended December
31, 2005, since there was no comparable expense during that quarter. Sonic
further believes this non-GAAP presentation 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 these non-GAAP measures internally to plan and forecast
future periods, to establish operational goals, to compare with its business
plan and individual operating budgets and to allocate resources. The economic
substance behind the decision to use these non-GAAP measures is an increase of
approximately $0.05, tax adjusted, per fully diluted share over the comparable
GAAP measures. Material limitations associated with the use of these measures
versus the comparable GAAP measures include the fact that our competitors, who
each have their own unique operating and acquisition history, may address the
impact of acquisitions, the one time write off of acquired in-process
technology, and/or adoption of SFAS 123R differently. Management compensates for
these limitations by providing full disclosure of the effects of the non-GAAP
measures, by presenting the corresponding GAAP financial measures in this
release and in Sonic's financial statements and by providing a reconciliation to
the corresponding GAAP measures to enable investors to perform their own
analysis.
Sonic Solutions
Reconciliation of Estimated GAAP earnings per diluted share to
Estimated non-GAAP earnings per diluted share (unaudited)
Third Quarter Ending
December 31, 2006,
Low High
------------------------------
Estimated GAAP earnings per diluted
share $0.14 $0.21
Estimated stock compensation expense
under SFAS 123R 0.02 0.02
Amortization of acquired intangibles 0.05 0.05
Acquired in-process technology 0.02 0.02
Estimated tax impact of non-GAAP
adjustments (0.04) (0.04)
------------------------------
Estimated non-GAAP earnings per
diluted share $0.19 $0.26
==============================
About Sonic Solutions
Sonic Solutions (NASDAQ:SNIC - News; 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(R)-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 as well as
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, and Roxio are trademarks or
registered trademarks of Sonic Solutions in the U.S. and/or other countries. All
other company or product names are trademarks or registered trademarks of their
respective owners and, in some cases, are used by Sonic under license.
Forward-Looking Statements
This press release and Sonic's second quarter ended September 30, 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 third quarter ending December 31, 2006 and
revenue guidance for the fiscal year ending March 31, 2008; and views regarding
opportunities presented by the "download and burn" business model, our ability
to strengthen our relationships with end-users, the opportunities and benefits
achieved through Sonic's integration of the Roxio Consumer Software Division,
the evolution of, and opportunities for Sonic arising from next-generation high
definition formats and channels, future market opportunities, and the potential
benefits of our acquisition of SystemOK. 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 Sarbanes Oxley ("SOX") compliance or business
expansion; loss of significant customers or key suppliers; risks related to
acquisitions and international operations; costs associated with 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 annual report on Form
10-K and Form 10-K/A 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