EX-99 3 a4390067ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Sonic Solutions Reports Results For Fourth Fiscal Quarter Ended March 31, 2003 NOVATO, Calif.--(BUSINESS WIRE)--May 5, 2003-- Record Revenues; Sonic Reports EPS of $0.01 per Share (GAAP basis) and $0.10 per Share (Non-GAAP basis) Exceeding Analyst Consensus Sonic Solutions (Nasdaq:SNIC) announced today results for the Company's fourth fiscal quarter ended March 31, 2003. A summary is provided in the table below: Summary Financial Results (in thousands, except per share amounts and percentages) Three Months Ended Twelve Months Ended March 31, March 31, 2003 2003 (Non 2003 2002 (Non 2003 2002 GAAP) (GAAP) (GAAP) GAAP) (GAAP) (GAAP) Net revenue $11,258 $9,467 $6,806 $35,609 $32,718 $19,104 Gross profit $ 9,490 $7,493 $5,155 $29,053 $25,271 $13,361 Gross margin 84.3% 79.1% 75.7% 81.6% 77.2% 69.9% Operating income (loss) $ 2,325 $ 328 $ 838 $ 6,565 $ 2,783 $(3,937) Operating margin 20.7% 3.5% 12.3% 18.4% 8.5% (20.6%) Net income (loss) per diluted share $ 0.10 $ 0.01 $ 0.04 $ 0.32 $ 0.13 $ (0.30) "Fiscal 2003 was a pivotal year for Sonic Solutions," commented Bob Doris, Sonic's Chief Executive Officer and President. "Revenues increased 71% over fiscal 2002, and the fourth quarter of fiscal 2003 marked the fifth consecutive profitable quarter for the Company. Over the last year, Sonic completed two strategic acquisitions and entered the retail distribution channel, solidifying our position as the world's leading supplier of DVD creation software, and increasing our OEM and end-user consumer customer base. We also laid the foundation for entry of our technology into the consumer electronics venue. We believe that Sonic is on an excellent trajectory, and that FY 2004 will be a year of continued growth and profitability." GAAP Presentation As reported under generally accepted accounting principles (GAAP), net revenue for the quarter was $9,467,000 compared to $6,806,000 for the same period in the prior fiscal year. Operating income for the quarter was $328,000 and net income per diluted share was $0.01 compared to operating income of $838,000 and net income per diluted share of $0.04 for the same period of the prior fiscal year. Net revenue for the fiscal year was $32,718,000 compared to $19,104,000 for the prior fiscal year. Operating income for the fiscal year was $2,783,000 and net income per diluted share was $0.13 compared to an operating loss of $3,937,000 and net loss per diluted share of $0.30 for the prior fiscal year. Non GAAP Presentation This press release includes a financial measure for income per share that excludes certain charges and that has not been calculated in accordance with GAAP. Sonic Solutions has provided this measurement in addition to GAAP because the Company believes it provides a consistent basis for comparison between reporting periods and is helpful to understand the Company's underlying operational results. This measure is provided as a complement to results provided under GAAP and should therefore not be considered an alternative to GAAP. This non GAAP measure may not be comparable to information provided by other companies. The reconciliation of GAAP to non GAAP measurements is set forth below. As previously announced, Sonic Solutions closed the acquisition of VERITAS Software's Desktop Mobile Division ("DMD") on December 18, 2002. During the December quarter Sonic Solutions introduced a non GAAP presentation of its results which it plans to continue in future quarters for as long as such a presentation continues to be meaningful. The non GAAP presentation adjusts the following items: Revenue - Under purchase accounting rules, OEM royalties received by Sonic on account of DMD's business may only be included in revenue if they reflect OEM shipments occurring after the date of the acquisition (December 18, 2002). The non GAAP presentation includes in revenue royalties for which Sonic received reports of shipments from OEMs after December 18, 2002 for shipments prior to December 18, 2002 and for which Sonic has invoiced the OEMs and expects to collect the amounts due in cash. Acquisition Related Intangible Amortization - Under purchase accounting rules, some portion of the acquisition purchase price is allocated to intangibles, such as core and developed technology and customer relationships, which are then amortized over various periods of time. These non-cash charges are eliminated in the non GAAP presentation in calculating operating income. Business Integration Expenses - Include certain charges that occur at or around the time of an acquisition. The non GAAP presentation eliminates any of these charges included in operating expense. Under the non GAAP presentation, net revenue for the quarter was $11,258,000. Operating income for the quarter was $2,325,000 and net income per diluted share was $0.10. June Quarter and Full Fiscal 2004 Guidance The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. For the full fiscal year 2004 (ending March 31, 2004), we are reaffirming our prior guidance and expect GAAP revenues to range from $51 million to $59 million, GAAP earnings per diluted share to range from $0.47 to $0.53 cents per share and non GAAP earnings per diluted share to range from $0.51 to $0.60 cents per share. For the first fiscal quarter of 2004 (ending June 30, 2003), we forecast that revenues will range from $11.0 million to $11.5 million, GAAP earnings per diluted share will range from $0.06 to $0.08 cents per share and non GAAP earnings per diluted share will range from $0.07 to $0.09 cents per share. The difference between the GAAP and non GAAP earnings relates to the amortization expense on acquired intangibles from our acquisitions which are deducted to calculate the GAAP earnings per diluted share. Investor Conference Call Sonic will hold its fiscal fourth quarter 2003 earnings conference call on Monday, May 5, 2003 at 2:00 p.m. (PDT)/5:00 p.m. (EDT). Investors are invited to listen to Sonic's quarterly conference call on the investor section of the Sonic Web site at www.sonic.com. A replay of the call will also be available via Webcast at www.sonic.com. Sonic Solutions Condensed Statement of Operations (in thousands, except per share amounts) Three Months Twelve Months Ended Ended March 31, March 31, 2003 2002 2003 2002 (a) ------- ------- ------- -------- Net revenue $ 9,467 $ 6,806 $32,718 $ 19,104 Cost of revenue 1,974 1,651 7,447 5,743 ------- ------- ------- -------- Gross profit 7,493 5,155 25,271 13,361 Operating expenses Marketing and sales 2,548 2,185 8,762 8,601 Research and development 3,825 1,542 10,625 5,897 General and administrative 792 590 3,101 2,095 Business integration 0 0 0 705 ------- ------- ------- -------- Total operating expenses 7,165 4,317 22,488 17,298 Operating income (loss) 328 838 2,783 (3,937) Other income (expense), net (70) 25 (47) (79) ------- ------- ------- -------- Income (loss) before income taxes 258 863 2,736 (4,016) Provision for income taxes 113 153 200 166 ------- ------- ------- -------- Net income (loss) $ 145 710 2,536 ($4,182) ======= ======= ======= ======== Net income (loss) per share applicable to common shareholders: Basic $ 0.01 $ 0.04 $ 0.15 ($0.30) ======= ======= ======= ======== Diluted $ 0.01 $ 0.04 $ 0.13 ($0.30) ======= ======= ======= ======== Shares used in computing net income (loss) per share: Basic 17,564 14,722 16,391 14,157 ======= ======= ======= ======== Diluted 20,807 18,909 19,311 14,157 ======= ======= ======= ======== (a) March 31, 2002 balances are derived from the audited financial statements included in the Company's 2002 Annual Report on Form 10-K. Sonic Solutions Condensed Balance Sheets (in thousands) March 31, March 31, 2003 2002 (a) ---------- --------- Assets Current assets: Cash, cash equivalents and investments $ 9,708 $ 11,114 Accounts receivable, net of allowance for returns and doubtful accounts of $425 and $383, at March 31, 2003 and March 31, 2002, respectively 5,823 3,143 Inventory 531 390 Prepaid expenses and other current assets 869 616 -------- -------- Total current assets 16,931 15,263 -------- -------- Fixed assets, net 1,745 1,123 Purchased and internally developed software costs, net 920 719 Acquired intangibles 1,345 769 Goodwill 6,715 0 Other assets 697 604 -------- -------- Total assets $ 28,353 $ 18,478 ======== ======== Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 7,087 $ 4,756 Deferred revenue and deposits 1,840 8,526 -------- -------- Total current liabilities 8,927 13,282 -------- -------- Shareholders' equity: Common stock 45,765 31,240 Preferred stock 0 2,832 Accumulated deficit (26,339) (28,876) -------- -------- Total shareholders' equity 19,426 5,196 -------- -------- Total liabilities and shareholders' equity $ 28,353 $ 18,478 ======== ======== (a) March 31, 2002 balances are derived from the audited financial statements included in the Company's 2002 Annual Report on Form 10-K. Sonic Solutions Reconciliation of GAAP Operating Results to Non GAAP Operating Results: (in thousands, except per share amounts and percentages, unaudited) Three Months Twelve Months Ended Ended March 31, March 31, 2003 2002 2003 2002 ------- ------- ------- -------- Reported revenue 9,467 6,806 32,718 19,104 Adjustments: DMD Royalty reports received after December 18, 2002 for OEM shipments prior to December 18, 2002 1,791 - 2,891 - ----------------- ----------------- Non GAAP revenue $11,258 $ 6,806 $35,609 $19,104 ================= ================= Reported gross profit 7,493 5,155 25,271 13,361 Adjustments: DMD Royalty reports received after December 18, 2002 for OEM shipments prior to December 18, 2002 1,791 - 2,891 - Cost of sales associated with DMD royalty reports (51) - (73) - Amortization of intangibles 257 220 964 909 ----------------- ----------------- Non GAAP gross profit $ 9,490 $ 5,375 $29,053 $14,270 ================= ================= Non GAAP gross margin 84.3% 78.9% 81.6% 74.7% Reported operating income (loss) 328 838 2,783 (3,937) Adjustments: DMD Royalty reports received after December 18, 2002 for OEM shipments prior to December 18, 2002 1,791 - 2,891 - Cost of sales associated with DMD royalty reports (51) - (73) - Business integration expenses - - - 705 Amortization of intangible assets 257 220 964 909 ----------------- ----------------- Non GAAP operating income (loss) $ 2,325 $ 1,058 $ 6,565 $(2,323) ================= ================= Reported Net income (loss) 145 710 2,536 (4,182) Adjustments: DMD Royalty reports received after December 18, 2002 for OEM shipments prior to December 18, 2002 1,791 - 2,891 - Cost of sales associated with DMD royalty reports (51) - (73) - Business integration expenses - - - 705 Amortization of intangible assets 257 220 964 909 Foreign withholding taxes (100) - (100) - ----------------- ----------------- Non GAAP net income (loss) basis $ 2,042 $ 930 $ 6,218 $(2,568) ================= ================= Net income (loss) per diluted share Non GAAP $ 0.10 $ 0.05 $ 0.32 $ (0.18) ================= ================= GAAP $ 0.01 $ 0.04 $ 0.13 $ (0.30) ================= ================= Shares used in computing diluted per share amounts 20,807 18,909 19,311 14,157 ================= ================= About Sonic Solutions (Nasdaq:SNIC) Based in Marin County, California, Sonic Solutions (http://www.sonic.com) is the world's leading supplier of DVD creation software for professional, industrial and consumer applications. The majority of major film releases on DVD have been produced on Sonic's professional DVD authoring systems in studios around the world. Sonic's MyDVD(R) and DVDit!(R) are the most widely used DVD creation applications by consumers and video enthusiasts and are the solutions of choice among the key PC and after-market drive suppliers. Sonic's RecordNow is a leading solution for audio and data mastering. Sonic's AuthorScript, the DVD and CD formatting and burning engine that underlies Sonic's applications, is the most widely deployed DVD software engine and has been licensed by Adobe, Microsoft, Sony, and many others. Forward-Looking Statements The above paragraphs of this press release may containing forward-looking statements that are based upon current expectations. Actual results could differ materially from those projected in the forward-looking statements as a result of various risks and uncertainties including, among others, the timely introduction and acceptance of new products, costs associated with new product introductions, the transition of products to new hardware configurations and platforms and other factors, including those discussed in the Company's annual and quarterly reports on file with the Securities and Exchange Commission. This press release should be read in conjunction with the Company's most recent annual report on Form 10-K, Form 10-Q and Registration Statement on file with the Securities and Exchange Commission, which contain a more detailed discussion of the Company's business, including risks and uncertainties that may affect future results. The Company does not undertake to update any forward-looking statements. Note to Editors: Sonic, the Sonic logo, Backup MyPC, CinePlayer, DVD PrePlay, DVD Producer, Edit-on-DVD, OpenDVD, PrimeTime, RecordNow and Simple Backup are trademarks of Sonic Solutions. AuthorScript, AutoDVD, DVD-Audio Creator, DVD Creator, DVDit!, DVD Fusion, MyDVD, NoNOISE, ReelDVD, Scenarist and Sonic Solutions are registered trademarks of Sonic Solutions. All other company or product names are trademarks of their respective owners and, in some cases, are used by Sonic under license. Specifications, pricing and delivery schedules are subject to change without notice. CONTACT: Sonic Solutions A. Clay Leighton, 415/893-8000 clay_leighton@sonic.com or Market Street Partners Carolyn Bass/Rob Hawkins, 415/321-2455 carolyn@marketstreetpartners.com rob@marketstreetpartners.com