Exhibit 99.1
Sonic Solutions Reports Selected Preliminary Financial Results for
Third Quarter Ended December 31, 2006; Updates Guidance
NOVATO, Calif.--(BUSINESS WIRE)--Feb. 15, 2007--Sonic Solutions(R)
(NASDAQ:SNIC) today announced the following selected preliminary
unaudited financial results for the quarter ended December 31, 2006.
Selected Preliminary Financial Results
Net revenue for the quarter was $39,120,000. Cost of revenue,
excluding any stock based compensation costs, was $8,838,000. Included
in cost of revenue is $1,236,000 of expense related to the
amortization of acquired intangibles. Marketing and sales expenses,
excluding any stock based compensation costs, were $8,003,000.
Research and development expenses, excluding any stock based
compensation costs, were $10,875,000. General and administrative
expenses, excluding any stock based compensation costs, were
$4,788,000. Sonic recorded a $3,400,000 charge for acquired in-process
research and development, on a preliminary basis, related to the
November 2006 acquisition of System OK AB, a private Swedish software
concern. Other income (net of other expenses) was $311,000. For the
quarter ended December 31, 2006, the number of shares outstanding on a
fully diluted basis was approximately 27,500,000.
As of December 31, 2006, Sonic had cash and cash equivalents of
$22,543,000 and short term investments of $33,450,000. Bank debt at
December 31, 2006 was $20,000,000. During the quarter and as part of
the acquisition of System OK, Sonic paid $7,920,000 to System OK's
shareholders.
Guidance
In addition, Sonic announced the following guidance:
For the fourth fiscal quarter ending March 31, 2007, management
anticipates net revenue, on a GAAP basis, will be between $37 million
and $41 million. Cost of revenue, as a percentage of net revenue and
excluding expenses related to the amortization of intangibles and
stock based compensation, is estimated to be 18%. Operating expenses,
excluding stock based compensation and any costs associated with
Sonic's options review, are estimated to be $24 million. Other income
(net of other expenses) is estimated to be $350,000. The number of
shares outstanding on a fully diluted basis is estimated to be 27.5
million.
For Sonic's Roxio Division, during fiscal year 2008, management
expects net revenue in the bricks and mortar retail business channel
to be roughly flat compared to fiscal 2007, OEM business channel net
revenue to grow by 10-15%, and direct online sales growth of more than
25%. Sonic's management further expects Advanced Technology Group
revenues to grow by more than 25% over fiscal 2007. Sonic will
forecast relatively flat revenue for its Professional Products Group
until the Company sees clear evidence of Hollywood's commitment to
volume title production in high-definition formats.
Options Review
The Company's selected preliminary results and guidance may be
adjusted as a result of possible restatement of historical results. As
previously announced on February 1, 2007, Sonic has commenced a
voluntary review of its historical and current stock option grant
practices and related accounting. Based on the review, the audit
committee and Sonic management have preliminarily concluded that,
under applicable accounting guidance, Sonic lacks sufficient
documentation for certain historical option grants and that the
measurement dates associated with these option grants will need to be
adjusted. Further, as previously announced, the audit committee, after
consultation with management and the Company's board of directors, has
determined that the Company's annual and interim financial statements
may no longer be relied upon.
Sonic believes it will have to record additional non-cash charges
for stock-based compensation expense and restate previous financial
statements, and that such charges will be material. Sonic is not yet
able to determine the amount of such charges or the resulting tax and
accounting impact of these actions. Sonic intends to file its restated
financial results and related periodic reports as quickly as possible.
All results and guidance reported today are presented without
taking into account any adjustments to either current or previously
reported results that may be required in connection with any
restatement and should be considered preliminary until Sonic files its
quarterly report on Form 10-Q for the third quarter ended December 31,
2006 and any required amended historical financial statements.
Investors are cautioned that Sonic is unable to provide
reconciliations to corresponding U.S. Generally Accepted Accounting
Principles ("GAAP") measures for the non-GAAP information provided in
this press release due to the ongoing options practice and accounting
review. The non-GAAP information includes those measures that exclude
stock based compensation costs and/or other expenses that would
otherwise be included in the applicable GAAP measures.
Sonic will conduct a conference call at 1:30 p.m. PST, or 4:30
p.m. EST, today to discuss its preliminary financial results for the
third quarter ended December 31, 2006. Investors are invited to listen
to Sonic's quarterly conference call on the investor section of
Sonic'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 9:00 PM PST, midnight EST, February
22, 2007, and can be accessed by dialing 719-457-0820 or 888-203-1112
and entering confirmation code 9663492.
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(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 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 quarter ended December 31, 2006
earnings conference call contain forward-looking statements that are
based upon current expectations. Such forward-looking statements
include revenue and guidance for the quarter ended March 31, 2007;
revenue guidance for the fiscal year ended March 31, 2008; 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, the potential benefits of our
acquisition of System OK, views regarding the status and preliminary
conclusions of Sonic's review of its historical and current stock
option grant practices and related accounting, the expected impact and
consequences of this review, including the expected restatement of
Sonic's historical financial statements, and the time for completing
the process.
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 introduction 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; and
changes in effective tax rates. Other risks and uncertainties that may
cause the actual results to differ materially from any future results,
performance or achievements expressed or implied by such
forward-looking statements include, but are not limited to, the
timing, final results and final conclusions of the audit committee's
review concerning matters related to Sonic's stock option grants,
including but not limited to, the accuracy of the stated dates of
option grants and whether all proper procedures were followed; the
impact of any restatement of financial statements, including but not
limited to the determination, as a result of the re-auditing of
certain prior period financials statements, of additional restatement
items beyond the restatement of non-cash stock-based compensation
items, the impact of which may be material, or the effects of other
actions that may be taken or required as a result of such review; tax
issues or liabilities that relate to adjustments to the measurement
dates associated with Company stock options; effects relating to
Sonic's inability to timely file reports with the Securities and
Exchange Commission; changes to the anticipated scope of the issues
beyond the timing and accuracy of measurement dates for option awards
to issues that Sonic does not currently realize exist; risks of
litigation or governmental investigations or proceedings arising out
of or related to Sonic's stock option grant practices or any
restatement of its financial statements; and Sonic's failure to
successfully appeal a NASDAQ determination to delist Sonic's common
stock from the NASDAQ Global Market for failure to meet continued
listing requirements. 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 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
Chief Financial Officer
Email: clay_leighton@sonic.com
or
StreetSmart Investor Relations
Brooke Deterline, 415-893-7824
Anne Leschin, 415-775-1788
Email: investinsonic@sonic.com