Exhibit 99.1
Sonic Solutions Reports Selected Preliminary Financial Results
for Fourth Quarter Ended March 31, 2007; Updates Guidance
NOVATO, Calif.--(BUSINESS WIRE)--May 17, 2007--Sonic Solutions(R)
(NASDAQ:SNIC) today announced the following selected preliminary
unaudited financial results for the fourth quarter ended March 31,
2007.
Selected Preliminary Financial Results
Net revenue for the quarter was $38.1 million. Cost of revenue,
excluding any stock-based compensation costs, was $9.0 million.
Included in cost of revenue is $1.4 million of expense related to the
amortization of acquired intangibles. Marketing and sales expenses,
excluding any stock-based compensation costs, were $8.6 million.
Research and development expenses, excluding any stock-based
compensation costs, were $11.7 million. General and administrative
expenses, excluding any stock-based compensation costs, were $4.9
million, of which $0.6 million represented legal and professional
expenses associated with the stock option review. Other income (net of
other expenses) was $0.2 million. For the quarter ended March 31,
2007, the number of shares outstanding on a fully diluted basis was
approximately 27.5 million.
As of March 31, 2007, Sonic had cash and cash equivalents of $17.1
million and short term investments of $47.3 million. Bank debt at
March 31, 2007 was $20.0 million.
Guidance
For the first fiscal quarter ending June 30, 2007, the Company's
management anticipates net revenue, on a GAAP basis, will be between
$33 million and $35 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 19%.
Operating expenses, excluding stock-based compensation costs and any
one-time charges associated with the Company's option review, are
estimated to be $25 million.
Options Review
The Company's selected preliminary results and guidance may be
adjusted as a result of the expected 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 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 cash and 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
annual report on Form 10-K for the fiscal year ended March 31, 2007,
its quarterly report on Form 10-Q for the third quarter ended December
31, 2006, and any required restatement of 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.
Continued Nasdaq Listing
As previously announced, on April 23, 2007, the Company received a
letter from a Nasdaq Listing Qualifications Panel (the "Panel")
notifying the Company that the Panel had granted the Company's request
for continued listing of its securities on the Nasdaq Global Select
Market. The Company's continued listing is subject to certain
conditions, including: (1) on or before June 20, 2007, the Company
must file its Form 10-Q for the quarter ended December 31, 2006, as
well as any required restatements; (2) on or before July 23, 2007, the
Company must hold its 2006 annual shareholder meeting; and (3) the
Company must provide Nasdaq with additional information regarding the
Company's previously announced voluntary review of its historical and
current stock option grant practices and related accounting. The
Company is currently unable to determine if it will be able to satisfy
the conditions specified by the Panel by their respective deadlines.
Should the Company be unable to meet the conditions set forth in the
Panel's decision, there can be no assurance that Nasdaq will grant an
additional extension of time or that the Company's securities will
continue to be listed on The Nasdaq Stock Market.
Call Details
Sonic will conduct a conference call at 1:30 p.m. PDT, or 4:30
p.m. EDT, today to discuss its preliminary financial results for the
fourth quarter ended March 31, 2007. 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 p.m. PDT, midnight EDT, Monday
May 21, 2007, and can be accessed by dialing 719/457-0820 or
888/203-1112 and entering confirmation code 5035094.
About Sonic Solutions
Sonic Solutions (NASDAQ:SNIC)(http://www.sonic.com) enables the
creation, management, and enjoyment of digital media content from
Hollywood to home. Sonic's products range from the advanced authoring
systems used to produce Hollywood DVD, HD DVD, and Blu-ray Disc film
releases to the award-winning Roxio(R)-branded photo, video, music,
and digital-media management applications. Sonic's patented
technologies and AuthorScript(R) media engine are relied upon by
leading technology firms to define rich media experiences on a wide
array of consumer electronics, mobile devices, set-top players, retail
kiosks, and PCs. Always an innovator, Sonic has taken a leading role
in helping professional and consumer markets make the successful
transition to the new high-definition media formats and, through Sonic
DVD On Demand(TM), defining new models for the digital distribution of
premium Hollywood entertainment. Sonic Solutions is headquartered in
Marin County, California.
Sonic, the Sonic logo, Sonic Solutions, AuthorScript, Sonic DVD On
Demand and Roxio are trademarks or registered trademarks of Sonic
Solutions or its subsidiaries in the United States 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 March 31, 2007
earnings conference call contain forward-looking statements that are
based upon current expectations. Such forward-looking statements
include expectations regarding revenue, income, expenses,
capitalization and other guidance for the quarter ending June 30,
2007, and the fiscal year ending March 31, 2008; views regarding
opportunities presented by the "download and burn" business model;
Sonic's ability to strengthen relationships with end-users; the
evolution of, and opportunities for Sonic arising from,
next-generation high-definition formats and channels; future market
opportunities; 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; the time required to complete the
review process; Sonic's ability to satisfy the conditions imposed by a
Nasdaq Listing Qualifications Panel for continued listing of Sonic's
securities on the Nasdaq Global Select Market; and potential impact of
pending litigation in which the Company, its directors, and/or its
executive officers may be involved.
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; the impact of
any 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; Sonic's failure to satisfy
conditions for continued listing on the NASDAQ Global Select Market;
and the impact of any further determinations by the Nasdaq Listing
Qualifications Panel. 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 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
Email: clay_leighton@sonic.com
Chief Financial Officer
or
StreetSmart Investor Relations
Brooke Deterline, 415-893-7824
Anne Leschin, 415-775-1788
Email: investinsonic@sonic.com