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As Of Filer Filing For·On·As Docs:Size Issuer Agent 2/09/11 Sonic Solutions/CA 8-K:2,9 2/08/11 2:310K Vintage/FA |
Document/Exhibit Description Pages Size 1: 8-K Current Report HTML 19K 2: EX-99.1 Miscellaneous Exhibit HTML 157K
Unassociated Document |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
December
31,
|
||||||||||||||||
2009
|
2010
|
2009
|
||||||||||||||
Net
revenue
|
$ | 26,427 | $ | 26,392 | $ | 77,175 | $ | 77,975 | ||||||||
Cost
of revenue
|
11,517 | 8,044 | 28,119 | 24,005 | ||||||||||||
Gross
profit
|
14,910 | 18,348 | 49,056 | 53,970 | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Marketing
and sales
|
12,668 | 8,489 | 27,673 | 22,245 | ||||||||||||
Research
and development
|
13,928 | 5,784 | 26,195 | 19,024 | ||||||||||||
General
and administrative
|
7,925 | 4,673 | 17,144 | 13,689 | ||||||||||||
Restructuring
charges
|
- | (58 | ) | - | 508 | |||||||||||
Acquisition
expenses
|
2,400 | - | 4,966 | - | ||||||||||||
Total
operating expenses
|
36,921 | 18,888 | 75,978 | 55,466 | ||||||||||||
Operating
loss
|
(22,011 | ) | (540 | ) | (26,922 | ) | (1,496 | ) | ||||||||
Other
income (expense), net
|
496 | 84 | 882 | (266 | ) | |||||||||||
Loss
before income taxes
|
(21,515 | ) | (456 | ) | (26,040 | ) | (1,762 | ) | ||||||||
Provision
for (benefit from ) income taxes
|
(25,751 | ) | (112 | ) | (26,600 | ) | 619 | |||||||||
Net
income (loss)
|
$ | 4,236 | $ | (344 | ) | $ | 560 | $ | (2,381 | ) | ||||||
Net
income (loss) per share:
|
||||||||||||||||
Basic
|
$ | 0.09 | $ | (0.01 | ) | $ | 0.02 | $ | (0.09 | ) | ||||||
Diluted
|
$ | 0.09 | $ | (0.01 | ) | $ | 0.02 | $ | (0.09 | ) | ||||||
Shares
used in computing net income (loss) loss per share:
|
||||||||||||||||
Basic
|
47,792 | 27,317 | 36,439 | 26,871 | ||||||||||||
Diluted
|
48,493 | 27,317 | 37,252 | 26,871 |
December
31,
|
||||||||
2010
(1)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 43,374 | $ | 54,536 | ||||
Short
term investments
|
3,284 | - | ||||||
Accounts
receivable, net of allowances of $4,301 and $2,511 at December 31, 2010
and March 31, 2010, respectively
|
45,740 | 11,270 | ||||||
Inventory
|
2,403 | 1,941 | ||||||
Prepaid
expenses and other current assets
|
14,211 | 3,497 | ||||||
Total
current assets
|
109,012 | 71,244 | ||||||
Fixed
assets, net
|
2,407 | 1,670 | ||||||
Purchased
and internally developed software costs, net
|
433 | 165 | ||||||
Goodwill
|
107,756 | 4,628 | ||||||
Acquired
intangibles, net
|
104,880 | 16,174 | ||||||
Deferred
tax benefit, net of current portion
|
- | 66 | ||||||
Other
assets
|
15,175 | 1,463 | ||||||
Total
assets
|
$ | 339,663 | $ | 95,410 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 6,063 | $ | 3,892 | ||||
Accrued
expenses and other current liabilities
|
28,329 | 21,916 | ||||||
Deferred
revenue, current portion
|
7,303 | 5,874 | ||||||
Capital
leases
|
64 | 123 | ||||||
Total
current liabilities
|
41,759 | 31,805 | ||||||
Other
long term liabilities, net of current portion
|
13,089 | 889 | ||||||
Deferred
revenue, net of current portion
|
359 | 76 | ||||||
Capital
leases, net of current portion
|
5 | 37 | ||||||
Total
liabilities
|
55,212 | 32,807 | ||||||
Commitments
and contingencies
|
||||||||
Shareholders'
equity:
|
||||||||
Common
stock, no par value, 100,000,000 shares authorized; 49,611,381 and
30,610,102 shares issued and outstanding at December 31, 2010 and March
31, 2010, respectively
|
421,691 | 200,375 | ||||||
Accumulated
deficit
|
(135,729 | ) | (136,289 | ) | ||||
Accumulated
other comprehensive loss
|
(1,511 | ) | (1,483 | ) | ||||
Total
shareholders' equity
|
284,451 | 62,603 | ||||||
Total
liabilities and shareholders' equity
|
$ | 339,663 | $ | 95,410 |
|
·
|
Contra
Revenue. We have excluded the effect of contra revenue
associated with our issuance and subsequent vesting of a warrant from our
calculation of the following: non-GAAP net revenue, non-GAAP
gross profit, non-GAAP gross margin, non-GAAP operating income, non-GAAP
operating margin, non-GAAP net income, non-GAAP net income per share and
Adjusted EBITDA. Because of varying available valuation
methodologies, subjective assumptions and the fact that the financial
impacts of this warrant issuance do not result in ongoing cash
expenditures or otherwise have a material impact on our ongoing business
operations, we believe that providing non-GAAP financial measures that
exclude contra revenue allows investors and analysts to make meaningful
comparisons between our ongoing core business operating results and those
of other companies. Contra revenue adjustments associated with
the grant of this warrant, vesting of the warrant, and changes in the
assumptions used to value the warrant will recur during the 2-year vesting
period of the warrant.
|
|
·
|
“Black Hole
Revenue.” We have excluded the effect of so-called “black hole
revenue” from our calculation of the following: non-GAAP net
revenue, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
income, non-GAAP operating margin, non-GAAP net income, non-GAAP net
income per share and Adjusted EBITDA. Under acquisition
accounting rules, Sonic will not recognize certain revenue (which we refer
to as “black hole revenue”) that DivX would have recognized as a
stand-alone company in the ordinary course of its business, including
royalties and other amounts paid pursuant to certain multi-year site
licenses and guaranteed minimum-royalty licenses, royalties and other
amounts received by Sonic post-acquisition, based upon shipments and other
activities conducted by customers prior to the DivX acquisition, and
certain DivX deferred revenues which were reduced to a discounted fair
value by Sonic in its purchase accounting. Because the “black
hole revenue” will generally result in cash payments to Sonic to the same
extent as payments would have been made to DivX as a stand-alone company,
and because the “black hole revenue” represents amounts generated by
ongoing DivX business operations in the ordinary course, we believe that
providing non-GAAP financial measures that exclude the effect of “black
hole revenue” allows investors and analysts to make meaningful comparisons
between our ongoing core business operating results and those of other
companies. This reduction in revenues will recur in future
periods for GAAP purposes.
|
|
·
|
Acquisition-Related Intangible
Amortization. Under
acquisition accounting rules, some portion of an acquisition purchase
price is generally allocated to intangibles, such as core and developed
technology and customer contracts, which are then amortized over various
periods of time. Our GAAP presentations include amortization on
certain acquired intangibles from prior consummated transactions,
including the DivX acquisition. We have excluded the effect of
amortization of acquired intangibles from our calculation of the
following: non-GAAP cost of revenue, non-GAAP gross profit,
non-GAAP gross margin, non-GAAP operating income, non-GAAP operating
margin, non-GAAP net income, non-GAAP net income per share and Adjusted
EBITDA. Amortization of acquired intangible assets expense is
inconsistent in amount and frequency and is significantly affected by the
timing and size of our various acquisitions. Further, the
amortization expense related to acquired intangibles does not result in
ongoing cash expenditures, and, in our view, does not otherwise have a
material impact on our ongoing business operations. Investors
should note that the use of acquired intangible assets contributed to
revenues earned during the periods presented and will continue to
contribute to future period revenues. This amortization expense
will recur in future periods for GAAP
purposes.
|
|
·
|
Acquisition-Related
Expense. We have excluded the effect of
acquisition-related expense from our calculation of the
following: non-GAAP operating expense, non-GAAP operating
income, non-GAAP operating margin, non-GAAP net income, non-GAAP net
income per share and Adjusted EBITDA. These expenses are
primarily attributable to acquisition expenses associated with the DivX
acquisition and the pending transaction with Rovi Corporation, and consist
of professional service fees and transition and integration
costs. We do not consider these acquisition-related costs to be
related to our ongoing operations of the acquired businesses and are
generally not relevant to assessing or estimating the long-term
performance of the acquired assets. By excluding
acquisition-related expenses from our non-GAAP measures, management is
better able to evaluate the Company's ability to utilize its existing
assets and estimate the long-term value that acquired assets will generate
for the Company. We believe that providing a supplemental
non-GAAP measure which excludes these items allows management and
investors to consider the ongoing operations of the business both with,
and without, such expenses.
|
|
·
|
Share-Based Compensation
Expense. We have excluded the effect of share-based
compensation expense from our calculation of the
following: non-GAAP operating expense, non-GAAP operating
income, non-GAAP operating margin, non-GAAP net income, non-GAAP net
income per share and Adjusted EBITDA. Because of varying
available valuation methodologies, subjective assumptions and the variety
of award types that companies may use, as well as the impact of
non-operational factors such as our share price and events such as tender
offers on the magnitude of this expense, we believe that providing
non-GAAP financial measures that exclude share-based compensation expense
allows investors and analysts to make meaningful comparisons between our
ongoing core business operating results and those of other
companies. Share-based compensation expense will recur in
future periods for GAAP purposes.
|
|
·
|
Payroll Tax Withholding
Liability. We have excluded the effect of the release of
a portion of a payroll tax liability we established during our 2009 fiscal
year in connection with our stock option review from our calculation of
the following: non-GAAP operating expenses, non-GAAP operating
income, non-GAAP operating margin, non-GAAP net income, non-GAAP net
income per share and Adjusted EBITDA. Because this release did
not result in cash receipts or otherwise have a material impact on our
ongoing business operations, we believe that providing non-GAAP financial
measures that exclude the impact of this release allows investors and
analysts to make meaningful comparisons between our ongoing core business
operating results and those of other
companies.
|
|
·
|
Tax Valuation
Allowance. We have excluded the effect of the release of
a portion of a tax valuation allowance we established during our 2009
fiscal year from our calculation of the following: non-GAAP net
income and non-GAAP net income per share. The release of the
valuation allowance did not result in the receipt of cash, and, in our
view, does not otherwise have a material impact on our ongoing business
operations. Accordingly, we believe that providing non-GAAP
financial measures that exclude this valuation expense allows investors
and analysts to make meaningful comparisons of our ongoing core business
operating results.
|
|
·
|
Adjusted
EBITDA. We provide information regarding our Adjusted
EBITDA. We believe this performance measure is useful to
investors because (a) it corresponds closely to the cash operating
income generated from our core operations by excluding significant
non-cash operating expenses that do not arise out of our core ongoing
operating activities, and (b) it provides greater insight into
management decision-making, as Adjusted EBITDA is one of our primary
internal metrics for evaluating the performance of our
business.
|
|
·
|
Non-GAAP Net Revenue, Cost of Revenue,
Gross Profit & Gross Margin. The following
table provides reconciliations relating to net revenue, cost of revenue,
gross profit and gross margin (in thousands, except for margin
percentages, unaudited):
|
Three
Months Ended
|
||||
GAAP
net revenue
|
$ | 26,427 | ||
Contra
revenue associated with warrants
|
730 | |||
Black
hole revenue adjustment for DivX
|
19,142 | |||
Non-GAAP
net revenue
|
$ | 46,299 | ||
GAAP
cost of revenue
|
$ | 11,517 | ||
Amortization
of purchased technology
|
(955 | ) | ||
Non-GAAP
cost of revenue
|
$ | 10,562 | ||
GAAP
gross profit
|
$ | 14,910 | ||
GAAP
gross margin (1)
|
56 | % | ||
Non-GAAP
gross profit
|
$ | 35,737 | ||
Non-GAAP
gross margin (2)
|
77 | % |
|
·
|
Operating Expenses. The following
table provides reconciliations relating to operating expenses (in
thousands, unaudited):
|
Three
Months Ended
|
||||
GAAP
total operating expenses
|
$ | 36,921 | ||
Share-based
compensation expense (1)
|
(4,171 | ) | ||
Acquisition
expense (2)
|
(2,400 | ) | ||
Release
of payroll witholding liability (3)
|
3,136 | |||
Non-GAAP
total operating expenses
|
$ | 33,486 |
|
·
|
Non-GAAP Operating Income, Operating
Margin, Net Income & Adjusted EBITDA. The following
table provides reconciliations relating to operating income, operating
margin, net income and Adjusted EBITDA (in thousands, except for margin
percentages, unaudited):
|
Three
Months Ended
|
||||
GAAP
operating loss (1)
|
$ | (22,011 | ) | |
Non-GAAP
operating income (2)
|
2,251 | |||
GAAP
operating margin (3)
|
(83 | %) | ||
Non-GAAP
operating margin
(4)
|
5 | % | ||
GAAP
net income
|
$ | 4,236 | ||
Contra
revenue associated with the warrant
|
730 | |||
Black
hole revenue adjustment for DivX
|
19,142 | |||
Amortization
of purchased technology
|
955 | |||
Share-based
compensation expense
|
4,171 | |||
Acquisition
expenses
|
2,400 | |||
Release
of payroll withholding liability (5)
|
(3,136 | ) | ||
Release
of tax valuation allowance (6)
|
(27,011 | ) | ||
Provision
for income taxes
|
1,260 | |||
Tax
adjustment by applying an effective tax rate of 40%
|
(1,099 | ) | ||
Non-GAAP
net income
|
$ | 1,648 | ||
Depreciation
|
642 | |||
Other
expense
|
(496 | ) | ||
Tax
adjustment by applying an effective tax rate of 40%
|
1,099 | |||
Adjusted
EBITDA
|
$ | 2,893 |
|
·
|
GAAP and Non-GAAP Net Income Per
Share. The following
table provides net income per share (in thousands except per share data,
unaudited):
|
Three
Months Ended
|
||||
GAAP
net income per share
|
||||
Basic
|
$ | 0.09 | ||
Diluted
|
$ | 0.09 | ||
Non-GAAP
net income per share
|
||||
Basic
|
$ | 0.03 | ||
Diluted
|
$ | 0.03 | ||
Shares
used in calculating GAAP & Non-GAAP net income per
share:
|
||||
Basic
|
47,792 | |||
Diluted
|
48,493 |
|
·
|
risks
and uncertainties relating to satisfaction of closing conditions for the
acquisition of Sonic by Rovi including the tender of a majority of the
outstanding shares of common stock of Sonic; the effects of the
announcement of the Rovi acquisition of Sonic on Sonic’s business; the
impact of any failure to complete the
acquisition;
|
|
·
|
the
continuing negative impact of current macroeconomic conditions on
consumers and associated impact on their ability and inclination to spend
on leisure and entertainment related activities and related software and
electronics;
|
|
·
|
our
ability to adapt to rapid changes in technology and consumer preferences,
and to successfully and cost-effectively develop and introduce new and
enhanced products and services;
|
|
·
|
competitive
pressures on our products and services, both from large established
competitors with greater technological and financial resources than we
possess, and from smaller companies that are able to compete effectively
through low-cost Internet sales of their software products and
services;
|
|
·
|
changes
in operating results, requirements or business models of our OEM or other
major customers;
|
|
·
|
our
ability to successfully introduce and profitably run our RoxioNow and DivX
TV initiatives, businesses with which we have had limited experience,
which are dependent on third parties for premium content selection and
delivery services, and which may give rise to legal exposure and other
business risks;
|
|
·
|
expenses
and issues associated with qualifying and supporting our products on
multiple computer platforms and in developing products and services
designed to comply with industry
standards;
|
|
·
|
issues
impacting third parties who supply us with services and operate our web
store, as well as retailers, resellers and distributors of our
products;
|
|
·
|
risks
associated with international operations, including risks related to
currency fluctuations, as well as our extensive software development
operations in China;
|
|
·
|
changes
in our product and service offerings that could cause us to defer the
recognition of revenue, thereby harming our operating
results;
|
|
·
|
risks
related to acquisition and integration of acquired business assets,
personnel and systems generally;
|
For
Investor Relations questions, contact:
|
For
Corporate Communications questions, contact:
|
Nils
Erdmann
|
Chris
Taylor
|
Phone: 415.893.8000
|
Phone: 415.893.8000
|
This ‘8-K’ Filing | Date | Other Filings | ||
---|---|---|---|---|
Filed as of: | 2/9/11 | 10-Q, 4 | ||
Filed on / For Period End: | 2/8/11 | 4, 425, SC 13G/A | ||
12/31/10 | 10-Q | |||
12/22/10 | 8-K | |||
10/7/10 | 3, 4, 8-K, 8-K/A | |||
10/1/10 | 4 | |||
3/31/10 | 10-K, 10-K/A | |||
List all Filings |