Roxio Raises Fourth Quarter Guidance Following Close of MGI Software Acquisition
Milpitas, California - (February 25, 2002) - Roxio, Inc., the Digital Media Company (Nasdaq: ROXI), today increased its financial guidance for its fiscal fourth quarter ending March 31, 2002 following the close of its acquisition of MGI Software (MGI) on January 31, 2002. Including the anticipated contribution from MGI for the two months ending March 31, 2002, Roxio expects total net revenue for its fourth fiscal quarter to be approximately $38 million and pro forma net income to be approximately $0.17 per fully diluted share, based on an estimated 19.1 million fully diluted shares. Pro-forma net income excludes non-cash charges related to stock-based compensation, amortization of intangible assets and acquisition-related in-process R&D. This is an increase from the company's prior guidance of $33 million in revenue and $0.15 pro forma net income per fully diluted share. Additionally, Roxio reiterated that it expects sales of the products acquired from MGI to contribute approximately $25 million in revenue and that results from MGI are expected to be accretive to pro forma earnings for fiscal 2003.
Roxio's acquisition of MGI creates one of the world's largest digital media software companies with the industry's most comprehensive product line-up for the consumer digital media experience. By adding the best-selling digital photo and digital video editing software products, PhotoSuite and VideoWave, to its own portfolio of best-selling CD burning and system recovery software, Roxio's product suite now addresses today's most popular and rapidly growing digital media applications.
"We are excited to have MGI's highly sought-after digital photo and video editing products under the Roxio umbrella and to expand our OEM customer base with digital device manufacturers in
new markets for Roxio such as digital cameras, digital camcorders,
printers, scanners and PDAs," commented Chris Gorog, president
and chief executive officer of Roxio. "The fourth quarter is
tracking to plan, and we are pleased to show an immediate positive
financial impact as a result of the timely and efficient completion
of the MGI transaction."
As reported in its press release dated February 1, 2002, Roxio
issued approximately 2.2 million shares to MGI shareholders as consideration
in the transaction. Based on the shares issued and the estimated
transaction costs, Roxio estimates that the acquisition of MGI will
be valued at approximately $33 to $35 million. Generally accepted
accounting principles require Roxio to perform a valuation on the
purchase price of the acquisition. Based on a preliminary analysis
of the purchase price and assets acquired, Roxio expects to record
a one-time non cash charge to the income statement in the current
quarter for in-process R&D of between $1.0 and $1.5 million.
In addition, Roxio's current quarter reported earnings are expected
to include non-cash charges related to stock-based compensation
and amortization of acquired intangible assets of between $3.0 and
$3.2 million. Including these charges, the Company expects to report
a net loss on a GAAP basis for the fourth quarter in the range of
$0.04 to $0.08. Roxio also expects to record on the balance sheet
identifiable intangible assets of between $8 and $12 million, which
will generally be amortized over an estimated useful life of three
years beginning from the date of acquisition. Residual goodwill
will also be recorded on Roxio's balance sheet and will be reviewed
periodically for impairment. Residual goodwill is the value of the
purchase price which remains after subtracting net assets acquired
or net liabilities assumed, identifiable intangible assets and in-process
Roxio plans to report actual results for its fourth quarter and
full fiscal year after the close of market on May 1, 2002.
Safe Harbor Statement
The matters discussed relating to Roxio in this press release,
in particular matters related to Roxio's OEM relationships, include
forward-looking statements that are subject to certain risks and
uncertainties, including delays in product development, competition
in the software industry, and failure to maintain OEM relationships,
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 July 1, 2002 and Quarterly Report
on Form 10-Q as filed with the SEC on November 13, 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.