Roxio Announces First Quarter Results
Company to Maintain Annual Profitability during Downturn
Santa Clara, California - (July 24, 2002) - Roxio, Inc. (Nasdaq: ROXI), The Digital Media Company®, provider of the best selling digital media software in the world, today reported financial results for its first quarter ended June 30, 2002. Net revenue for the first quarter was $32.3 million, and pro forma net income was $642,000 or $0.03 per basic and diluted share, excluding non-cash charges related to the amortization of intangible assets and deferred stock-based compensation. Both the top and bottom line results are above the Company's revised guidance provided on June 25, 2002 and compare with net revenue of $37.0 million and pro forma net income of $7.2 million or $0.44 per basic and $0.43 per diluted share for the first quarter of the prior fiscal year.
Chris Gorog, Roxio's President and Chief Executive Officer stated, "The significant downturn in PC and CD recorder shipments as well as overall softness in the retail software sector globally has affected our results. Analysts suggest that these factors will
continue to impact our industry for the near-term, so we are taking
actions to better align our cost structure with current economic
realities and will reduce our fiscal 2003 spending by approximately
$15 million. While we are implementing cost-cutting measures throughout
the company, we will continue to maintain all necessary resources
to support the growth we anticipate in the second half of our fiscal
year resulting from several major product releases. Despite the
current market downturn, our business fundamentals and balance sheet
remain healthy and we are very excited about our upcoming product
The reported net loss for the first quarter of fiscal 2003 was $1.2
million, or $0.06 per basic and diluted share including non-cash
charges related to the amortization of intangible assets and deferred
stock-based compensation. This compares with reported net income
of $2.4 million or $0.14 per basic and diluted share for the first
quarter of fiscal 2002.
Elliot Carpenter, Roxio's Chief Financial Officer, commented, "We
are revising our guidance in response to reduced industry forecasts
for PC and software sales. Specifically, we are assuming negative
PC unit growth for calendar 2002 and lower than normal seasonal
retail growth. On the positive side, we believe our planned new
product releases will drive growth in the second half of our fiscal
year, and we will continue our strategy towards a more consumer
oriented model, thus building in less economic dependence on income
directly from our OEM partners. In light of the current market environment
we are implementing changes to our cost structure, which should
have a meaningful impact beginning in our third fiscal quarter.
Based on these assumptions, we expect revenues for our seasonally
soft second fiscal quarter to be approximately $27 million and to
incur a proforma net loss of up to $0.10 per diluted share and a
reported net loss of up to $0.15 per diluted share. For fiscal year
2003 we expect revenues to be in the range of $130 to $140 million
and to generate proforma net income per diluted share in the range
of $0.30 to $0.40 and reported net income of $0.06 to $0.16 per
diluted share. We would expect any signs of recovery in the PC and
retail software sales sectors to result in upside to our current
Recent Corporate Highlights Roxio recently:
Debuted VideoWave Movie Creator™ at DV Expo in New York,
an automated, yet powerful way for consumers to edit video, burn
it to DVD or CD, and share with family and friends. The product,
which has been favorably received by the press, is currently in
production and will be available on retail shelves in early August,
in time for the back-to-school and holiday shopping seasons.
Announced that Yamaha Electronics Corporation has selected
Roxio's Toast as its worldwide CD-Recording software bundle for
two external recorders--the CRW-F1ZSX (SCSI) and the Dual interface
CRW-F1ZDX (FireWire/USB 2.0), both developed specifically for
the Macintosh user.
Partnered with SnapFish, a leading online photo service, to
provide a co-branded service that allows customers to upload and
store digital photos, create online photo albums, and order prints
and special products like greeting cards. Roxio's partnership
with SnapFish is the latest addition to its growing roster of
content and service providers, which include pressplay and Audible.com.
Reconciliation of Reported Earnings to Pro Forma Earnings:
Safe Harbor Statement
Except for historical information, the matters discussed in this
press release, in particular matters related to demand for Roxio's
Toast product, are forward-looking statements that are subject to
certain risks and uncertainties such as competition, general economic
factors and product failures that could cause actual results to
differ materially from those projected. Additional information on
these and other factors are contained in Roxio's reports filed
with the Securities and Exchange Commission (SEC), including the
Company's Annual Report on Form 10-K as filed with the SEC
on June 29, 2001, and in Roxio's Quarterly Report on Form 10-Q
as filed with the SEC on February 14, 2002, copies of which are
available at the website maintained by the SEC at http://www.sec.gov.
Roxio assumes no obligation to update the forward-looking statements
included in this press release.
Roxio, a division of Sonic Solutions, develops and markets the best-selling digital media software in the world. Roxio offers
award-winning software products for CD/DVD burning, photo editing and video editing and has an installed base of over 150 million
users. Roxio distributes its products globally through strategic partnerships with major hardware manufacturers, through leading
retailers, through Internet partnerships and through direct sales at www.roxio.com. Roxio's
parent company, Sonic Solutions (NASDAQ: SNIC;
http://www.sonic.com) is the leader in digital media software and provides a broad range of software
tools and applications for creative professionals, business and home users and technology partners. Sonic's products range from professional
DVD authoring systems and interactive content delivery technologies that are used to produce the majority of Hollywood movies released on DVD,
to the award-winning Roxio- and Sonic-branded CD and DVD creation, playback and backup applications that have become the premiere solutions
for consumers and business users worldwide. Sonic's AuthorScript® is the de facto standard for CD and DVD burning and formatting and has
been licensed by major software and hardware manufacturers, including Adobe, Broadcom, Microsoft, Scientific-Atlanta, Sony, and many others.
Sonic Solutions is headquartered in Marin County, California.
Sonic, the Sonic logo, Sonic Solutions, Roxio, MyDVD, CineMagic, Plug & Burn, LiveShare, Roxio Easy Media Creator, and
AuthorScript are trademarks or registered trademarks of Sonic Solutions or its subsidiaries in the United States and/or other
countries. Dolby is a trademark of Dolby Laboratories. All other company or product names are trademarks of their respective
owners and, in some cases, are used by Sonic Solutions under license. Specifications, pricing and delivery schedules are subject
to change without notice.